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Remittances as a social status signaling device

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  • Naiditch, Claire
  • Vranceanu, Radu

Abstract

Like all human beings, migrants may have a concern about their prestige or social status in the eyes of left-home family and friends. They can remit money in order to signal their economic success and increase their status. We show that if migrants' income is private information, unsuccessful migrants might accept a worsening of their living conditions and send back home large amounts of remittances only in order to make residents believe that they are successful. In some cases, successful migrants can signal their true favorable economic situation by remitting an even larger amount. The game presents various equilibria that differ with respect to the proportion and nature of the migrants who sacrifice consumption opportunities to status revealing actions.

Suggested Citation

  • Naiditch, Claire & Vranceanu, Radu, 2011. "Remittances as a social status signaling device," Research in Economics, Elsevier, vol. 65(4), pages 305-318, December.
  • Handle: RePEc:eee:reecon:v:65:y:2011:i:4:p:305-318
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    1. Giraud, Gaël & Renouard, Cécile, 2011. "Is the Veil of Ignorance Transparent?," OEconomia, Editions NecPlus, vol. 2011(02), pages 239-258, June.

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    More about this item

    Keywords

    Migration Remittances Social status Perfect Bayesian equilibrium Signaling;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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