Asymmetric Information about Migrant Earnings and Remittance Flows

Ganesh Seshan () and Robertas Zubrickas

The World Bank Economic Review, 2017, vol. 31, issue 1, 24-43

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.

Keywords: asymmetric information; transnational household; remittance contracts; international migration; India; Qatar (search for similar items in EconPapers)
JEL-codes: D13 D82 F22 F24 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (11)

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Working Paper: Asymmetric information about migrant earnings and remittance flows (2015)
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