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Migrant wages, remittances and recipient labour supply in a moral hazard model

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  • Naiditch, Claire
  • Vranceanu, Radu

Abstract

This paper analyzes the interaction between migrants' income and remittances and between remittances and the labour supply of residents. The model is cast as a two-period game with imperfect information about the residents' real economic situation. Residents subject to a good economic situation may behave as if they were in a poor economic situation only in order to manipulate remitters' expectations. The latter, being aware of this risk, reduce the remitted amount accordingly. Therefore, in the equilibrium, residents who really are victims of the bad economic outlook are penalized as compared to the perfect information set-up. In some circumstances, they can signal their type by drastically cutting working hours, thus further enhancing their precarity right when their economic situation is the worst.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 33 (2009)
Issue (Month): 1 (March)
Pages: 60-82
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Handle: RePEc:eee:ecosys:v:33:y:2009:i:1:p:60-82

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Related research

Keywords: Migrants Remittances Perfect Bayesian Equilibrium Labour supply Signaling Altruism;

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References

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  1. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July.
  2. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  3. José Ernesto López-Córdova, 2006. "Globalization, migration and development : the role of Mexican migrant remittances," INTAL Working Papers 1440, Inter-American Development Bank, INTAL.
  4. Gatti, Roberta, 2000. "Family altruism and incentives," Policy Research Working Paper Series 2505, The World Bank.
  5. Besancenot, Damien & Vranceanu, Radu, 2005. "Socially Efficient Managerial Dishonesty," ESSEC Working Papers DR 05005, ESSEC Research Center, ESSEC Business School.
  6. Azam, Jean-Paul & Gubert, Flore, 2005. "Those in Kayes. The impact of remittances on the recipients in Africa," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/4571, Université Paris-Dauphine.
  7. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Migration, Remittances, and Male and Female Employment Patterns," American Economic Review, American Economic Association, vol. 96(2), pages 222-226, May.
  8. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  9. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  10. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
  11. Stephen Drinkwater & Paul Levine & Emanuela Lotti, 2006. "Labour Market and Investment Effects of Remittances," School of Economics Discussion Papers 1906, School of Economics, University of Surrey.
  12. Michael Spence, 2002. "Signaling in Retrospect and the Informational Structure of Markets," American Economic Review, American Economic Association, vol. 92(3), pages 434-459, June.
  13. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  14. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
  15. Johnson, George E & Whitelaw, W E, 1974. " Urban-Rural Income Transfers in Kenya: An Estimated-Remittances Function," Economic Development and Cultural Change, University of Chicago Press, vol. 22(3), pages 473-79, April.
  16. Riccardo Faini, 2006. "Remittances and the Brain Drain," IZA Discussion Papers 2155, Institute for the Study of Labor (IZA).
  17. Edgard R. Rodriguez & Susan Horton, 1995. "International Return Migration and Remittances in the Philippines," Working Papers horton-95-01, University of Toronto, Department of Economics.
  18. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
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Cited by:
  1. Radu Vranceanu & Claire Naiditch, 2009. "Migratory equilibria with invested remittances," Post-Print hal-00553550, HAL.

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