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Asymmetric Information about Migrant Earnings and Remittance Flows

Author

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  • Ganesh Seshan
  • Robertas Zubrickas

Abstract

We examine asymmetric information about migrant earnings and its implications for remittance behavior using a sample of Indian households with husbands working overseas in Qatar. On average, wives underreport their husbands’ income and underreporting is more prevalent in households with higher earning migrants. The discrepancy in earning reports is strongly correlated with variation in remittances: greater underreporting by wives is associated with lower remittances. We develop an exchange model of remittances with asymmetric information and costly state verification. The optimal remittance contract prescribes a threshold for remittances that invites verification only if unmet. The model's predictions closely match our empirical findings.

Suggested Citation

  • Ganesh Seshan & Robertas Zubrickas, 2017. "Asymmetric Information about Migrant Earnings and Remittance Flows," The World Bank Economic Review, World Bank, vol. 31(1), pages 24-43.
    • Handle: RePEc:oup:wbecrv:v:31:y:2017:i:1:p:24-43.
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    File URL: http://hdl.handle.net/10.1093/wber/lhv032
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    Cited by:

    1. Thanos Mergoupis & Robertas Zubrickas, 2024. "Work experience, information revelation, and study effort," Oxford Economic Papers, Oxford University Press, vol. 76(2), pages 495-513.
    2. Baseler,Travis Andreas & Narayan,Ambar & Ng,Odyssia Sophie Si Jia & Sinha Roy,Sutirtha, 2023. "Does Food Insecurity Hinder Migration ? Experimental Evidence from the Indian Public Distribution System," Policy Research Working Paper Series 10549, The World Bank.
    3. Thomas Joseph & Yaw Nyarko & Shing-Yi Wang, 2018. "Asymmetric Information and Remittances: Evidence from Matched Administrative Data," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 58-100, April.
    4. De Arcangelis, Giuseppe & Fertig, Alexander & Liang, Yuna & Srouji, Peter & Yang, Dean, 2023. "Measuring remittances," Journal of Development Economics, Elsevier, vol. 161(C).
    5. Kaufmann, Marc & Machado, Joël & Verheyden, Bertrand, 2025. "Why do migrants stay unexpectedly? Misperceptions and implications for integration," Journal of Mathematical Economics, Elsevier, vol. 117(C).
    6. Giuseppe Arcangelis & Majlinda Joxhe, 2021. "Intra-household allocation with shared expenditure choices: experimental evidence from Filipino migrants," Review of Economics of the Household, Springer, vol. 19(4), pages 1245-1274, December.
    7. Giuseppe Arcangelis & Majlinda Joxhe, 0. "Intra-household allocation with shared expenditure choices: experimental evidence from Filipino migrants," Review of Economics of the Household, Springer, vol. 0, pages 1-30.
    8. Edwards, Ryan Barclay & Stambolie, Estelle, 2025. "The income elasticity of remittances: new evidence from financial diaries," SocArXiv 5nhq6_v1, Center for Open Science.
    9. Carolina Alban Conto, 2021. "Does Distance-Driven Information Asymmetry Affect Private Income Transfers? Theory and Evidence From Colombia," Working Papers hal-03192955, HAL.
    10. Catia Batista & Gaia Narciso, 2018. "Migrant Remittances and Information Flows: Evidence from a Field Experiment," The World Bank Economic Review, World Bank, vol. 32(1), pages 203-219.
    11. Laurent Bossavie & Daniel Garrote Sánchez & Mattia Makovec, 2024. "The Journey Ahead," World Bank Publications - Books, The World Bank Group, number 42224, April.
    12. Murard, Elie, 2016. "Consumption and Leisure: The Welfare Impact of Migration on Family Left Behind," IZA Discussion Papers 10305, Institute of Labor Economics (IZA).
    13. Joachim De Weerdt & Garance Genicot & Alice Mesnard, 2019. "Asymmetry of Information within Family Networks," Journal of Human Resources, University of Wisconsin Press, vol. 54(1), pages 225-254.
    14. Ur Rehman, Obeid, 2023. "Spousal communication and information sharing: Evidence from migrants and their spouses," Journal of Development Economics, Elsevier, vol. 165(C).
    15. Mobarak, Ahmed & Sharif, Iffath & Shrestha, Maheshwor, 2021. "Returns to International Migration: Evidence from a Bangladesh-Malaysia Visa Lottery," CEPR Discussion Papers 15990, C.E.P.R. Discussion Papers.
    16. Yalei Zhai & Hisaki Kono, 2021. "The poor receive less: Remittance behaviour of female migrants in Myanmar," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(5), pages 910-926, July.
    17. Kazianga, Harounan & Wahhaj, Zaki, 2020. "Will urban migrants formally insure their rural relatives? Family networks and rainfall index insurance in Burkina Faso," World Development, Elsevier, vol. 128(C).

    More about this item

    Keywords

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    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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