A theory of family education incentives and inequality

Jellal, Mohamed (2014): A theory of family education incentives and inequality.

Abstract

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 risk-sharing between the two generations, so that poor families experience higher agency costs, therefore inequality persists.

• Item Type: MPRA Paper
• Language: English
• Keywords: Asymmetric information, Family ,Education, Incentives, Transfers, Inequality.
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I21 - Analysis of Education; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I22 - Educational Finance ; Financial Aid; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I24 - Education and Inequality; J - Labor and Demographic Economics > J1 - Demographic Economics; J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility ; Family Planning ; Child Care ; Children ; Youth

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