A land of milk and honey with streets paved with gold: Do emigrants have over-optimistic expectations about incomes abroad?
AbstractMillions of people emigrate every year in search of better opportunities. Anecdotes of emigrants with over-optimistic expectations about the incomes they can earn abroad suggest excessive migration pressure. Yet there is almost no statistical evidence on how accurately emigrants predict the incomes that they will earn working abroad. In this paper, we combine a natural emigration experiment with unique survey data on would-be emigrants' probabilistic expectations about employment and incomes in the migration destination. Our procedure enables us to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country. We find significant under-estimation of both unconditional and conditional labor earnings at all points in the distribution for males, but reasonably accurate expectations for females. This under-estimation appears driven in part by inaccurate information flows from extended family, by basing expectations on older cohorts, and by differences in the gender wage premium between source and origin countries.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 102 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/devec
Expectations; Migration; Natural experiment;
Other versions of this item:
- McKenzie, David & Gibson, John & Stillman, Steven, 2007. "A land of milk and honey with streets paved with gold : do emigrants have over-optimistic expectations about incomes abroad ?," Policy Research Working Paper Series 4141, The World Bank.
- David McKenzie & John Gibson & Steven Stillman, 2007. "A land of milk and honey with streets paved with gold: Do emigrants have over-optimistic expectations about incomes abroad?," CReAM Discussion Paper Series 0709, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- McKenzie, David & Gibson, John & Stillman, Steven, 2007. "A Land of Milk and Honey with Streets Paved with Gold: Do Emigrants Have Over-Optimistic Expectations about Incomes Abroad?," IZA Discussion Papers 2788, Institute for the Study of Labor (IZA).
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
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