Intra-Household Incentive Design: An Experiment on Parent-Child Decision Dynamics in Pakistan

Abstract

How should we design and target incentives for skills investment in young adults who live with their parents? We study the role of intra-household payment and information targeting on the effectiveness of a conditional cash transfer (CCT) program using a randomized control trial. The program aims to boost completion of a digital skills training program among young females in urban Pakistan. Fixing the incentive size and daughters' knowledge about it, we cross vary (1) the payment split between parents and daughters and (2) whether parents receive information about the daughters' incentive. We find that under asymmetric information about the CCT, incentivizing parents leads to a 103% increase in training completion compared to incentivizing daughters. When both parents and daughters know about the CCT, completion rates do not vary by the incentive split, consistent with the efficient collective household model. Our results suggest that in this parent-child context, incomplete information sharing is the main barrier to the optimal incentive targeting, instead of bargaining frictions on the future payment.

Keywords: D13, J24, J16

JEL Classification: D13, J24, J16