Munich Personal RePEc Archive

A Theory of Educational Inequality Family and Agency Costs

Jellal, Mohamed (2009): A Theory of Educational Inequality Family and Agency Costs.

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In this paper, we examine the consequences of imperfect information on the pattern of transfers from parents to children. Drawing on the theory of mechanism design, we consider a model of family contract with two levels of effort. We prove that equal transfers among children are expected under perfect information, while the second-best contract implies risksharing between the two generations, so that poor families experience higher agency costs..

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