Asymmetric Information and Remittances: Evidence from Matched Administrative Data
NBER Working Paper No. 20986
Using new data matching remittances and monthly payroll disbursals, we demonstrate how fluctuations in migrants' earnings in the United Arab Emirates affect their remittances. We consider three types of income fluctuations that are observable by families at home: seasonalities, weather shocks and a labor reform. Remittances move with all of these income changes. Remittances do not move with an individual's growth in earnings over time. The slope of the relationship between earnings and time in the UAE varies across individuals and is not easy to observe by families. Thus, a key characteristic that drives remittance behavior is the observability of income rather than other features of these fluctuations. The results are consistent with a private information model where remittances are viewed by the migrant worker as payments to their families in an income-sharing contract.
Document Object Identifier (DOI): 10.3386/w20986
Published: Thomas Joseph & Yaw Nyarko & Shing-Yi Wang, 2018. "Asymmetric Information and Remittances: Evidence from Matched Administrative Data," American Economic Journal: Applied Economics, vol 10(2), pages 58-100.
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