Cigno, Alessandro; Luporini, Annalisa; Pettini, Anna - 2021
We consider a case where some of the parents have higher ability to raise children than others. First-best policy gives … misrepresent their true ability by investing less in their children, and having a lower number of children. The second-best policy … induces more able parents to have the first-best number of children, and to invest in each child at the first-best level. Less …
