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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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File URL: http://www.sciencedirect.com/science/article/pii/S0939-3625(08)00069-1
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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. 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).
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  16. 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.
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  18. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  19. Besancenot, Damien & Vranceanu, Radu, 2005. "Socially Efficient Managerial Dishonesty," ESSEC Working Papers DR 05005, ESSEC Research Center, ESSEC Business School.
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  24. repec:dau:papers:123456789/4571 is not listed on IDEAS
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