Asymmetric information about migration earnings and remittance flows

Ganesh Seshan, Robertas Zubrickas

Research output: Contribution to journalArticle

8 Citations (Scopus)
83 Downloads (Pure)

Abstract

We 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. We develop an exchange model of remittances 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.
Original languageEnglish
Pages (from-to)24-43
Number of pages25
JournalWorld Bank Economic Review
Volume31
Issue number1
Early online date16 Jul 2015
DOIs
Publication statusPublished - 1 Feb 2017

    Fingerprint

Cite this