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

  • Naiditch, Claire
  • Vranceanu, Radu

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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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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  1. Vickers, John, 1986. "Signalling in a Model of Monetary Policy with Incomplete Information," Oxford Economic Papers, Oxford University Press, vol. 38(3), pages 443-55, November.
  2. Faini, Riccardo, 2006. "Remittances and the Brain Drain," CEPR Discussion Papers 5720, C.E.P.R. Discussion Papers.
  3. 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.
  4. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  5. Besancenot, Damien & Vranceanu, Radu, 2005. "Socially Efficient Managerial Dishonesty," ESSEC Working Papers DR 05005, ESSEC Research Center, ESSEC Business School.
  6. 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.
  7. Jean-Paul Azam & Flore Gubert, 2002. "Those in Kayes. The impact of remittances on their recipients in Africa," Working Papers DT/2002/11, DIAL (Développement, Institutions et Mondialisation).
  8. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
  9. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
  10. 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.
  11. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  12. Spence, A. Michael, 2001. "Signaling in Retrospect and the Informational Structure of Markets," Nobel Prize in Economics documents 2001-6, Nobel Prize Committee.
  14. 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.
  15. Gatti, Roberta, 2000. "Family altruism and incentives," Policy Research Working Paper Series 2505, The World Bank.
  16. repec:tpr:qjecon:v:87:y:1973:i:3:p:355-74 is not listed on IDEAS
  17. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA).
  18. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  19. 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.
  20. Adams, Richard H. Jr., 2006. "Remittances and poverty in Ghana," Policy Research Working Paper Series 3838, The World Bank.
  21. 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.
  22. 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.
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