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 economic and social opportunities. Anecdotal evidence suggests that emigrants may have over-optimistic expectations about the incomes they can earn abroad, resulting in excessive migration pressure, and in disappointment among those who do migrate.Yet there is almost no statistical evidence on how accurately these emigrants predict the incomes that they will earn working abroad. In this paper the authors combine a natural emigration experiment with unique survey data on would-be emigrants'probabilistic expectations about employment and incomes in the migration destination. Their procedure enables them to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country. The authors find a significant underestimation of both unconditional and conditional labor earnings at all points in the distribution. This underestimation appears driven in part by potential migrants placing too much weight on the negative employment experiences of some migrants, and by inaccurate information flows from extended family, who may be trying to moderate remittance demands by understating incomes.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4141.
Date of creation: 01 Mar 2007
Date of revision:
Population Policies; Economic Theory&Research; Remittances; Labor Markets; Fiscal&Monetary Policy;
Other versions of this item:
- McKenzie, David & Gibson, John & Stillman, Steven, 2013. "A land of milk and honey with streets paved with gold: Do emigrants have over-optimistic expectations about incomes abroad?," Journal of Development Economics, Elsevier, vol. 102(C), pages 116-127.
- 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).
- 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.
- 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, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
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- One evaluation, one paper? Getting more for your money
by ? in Development Impact on 2012-01-09 04:18:17
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