Asymmetric Information about Migrant Earnings and Remittance Flows
This paper examine asymmetric information about migrant earnings and its implications for remittance behavior using a sample of Indian households with husbands working overseas in Qatar. On average, wives underreport their husbands’ income and unde...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/07/24784147/asymmetric-information-migrant-earnings-remittance-flows http://hdl.handle.net/10986/22452 |
| Summary: | This paper examine asymmetric
information about migrant earnings and its implications for
remittance behavior using a sample of Indian households with
husbands working overseas in Qatar. On average, wives
underreport their husbands’ income and underreporting is
more prevalent in households with higher earning migrants.
The discrepancy in earning reports is strongly correlated
with variation in remittances: greater underreporting by
wives is associated with lower remittances. An exchange
model of remittances is developed with asymmetric
information and costly state verification. The optimal
remittance contract prescribes a threshold for remittances
that invites verification only if unmet. The model’s
predictions closely match our empirical findings. |
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