Transfers to Families with Children as a Principal-agent Problem

  title={Transfers to Families with Children as a Principal-agent Problem},
  author={Alessandro Cigno and Annalisa Luporini and Anna Pettini},
The relationship between government and parents is modelled as a principalagent problem, with the former in the role of principal and the latter in the role of agents. We make three major points. The first is that, if the well-being of the child depends not only on luck, but also on parental actions that the government cannot readily observe, the latter can influence parental behaviour indirectly, by conditioning transfers on performance. The second point is that, if there are market inputs… CONTINUE READING
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