School Attendance, Child Labor and Cash Transfers: An Impact Evaluation of Panes

PEP Working Paper No. 2011-22

Posted: 10 Feb 2012 Last revised: 11 Jul 2018

See all articles by Veronica Amarante

Veronica Amarante

United Nations - Economic Commission for Latin American and the Caribbean (ECLAC)

Mery Ferrando

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); Universidad de la República - Instituto de Economía

Andrea Vigorito

Universidad de la Republica (Uruguay) - Instituto de Economia - Facultad de Ciencias Economicas

Date Written: February 9, 2012

Abstract

We use a comparative approach to study the incentives provided by different types of compensation contracts, and their valuation by risk averse managers, in a fairly general setting. We show that concave contracts tend to provide more incentives to risk averse managers, while convex contracts tend to be more valued by prudent managers. This is because concave contracts concentrate incentives where the marginal utility of risk averse managers is highest, while convex contracts protect against downside risk. Thus, prudence can contribute to explain the prevalence of stock-options in executive compensation. We also present a condition on the utility function which enables to compare the structure of optimal contracts associated with different risk preferences.

JEL Classification: I38, J13, I21, J22

Suggested Citation

Amarante, Veronica and Ferrando, Mery and Vigorito, Andrea, School Attendance, Child Labor and Cash Transfers: An Impact Evaluation of Panes (February 9, 2012). PEP Working Paper No. 2011-22, Available at SSRN: https://ssrn.com/abstract=2002027

Veronica Amarante (Contact Author)

United Nations - Economic Commission for Latin American and the Caribbean (ECLAC)

Av. Dag Hammarskjöld 3477
Vitacura
Santiago, 7630412
Chile

Mery Ferrando

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

HOME PAGE: http://www.uclouvain.be/mery.ferrando

Universidad de la República - Instituto de Economía ( email )

Joaquín Requena 1375
Montevideo, 11200
Uruguay

HOME PAGE: http://www.iecon.ccee.edu.uy/ferrando-mery/autor/8/es/

Andrea Vigorito

Universidad de la Republica (Uruguay) - Instituto de Economia - Facultad de Ciencias Economicas ( email )

Joaquin Requena 1375
Montevideo 11200, 11200
Uruguay

HOME PAGE: http://www.iecon.ccee.edu.uy

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