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Remittances as a Social Status Signaling Device

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.

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Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number DR 09015.

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Length: 25 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:ebg:essewp:dr-09015
Contact details of provider: Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
Web page: http://www.essec.edu/
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  1. Naiditch, Claire & Vranceanu, Radu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Economic Systems, Elsevier, vol. 33(1), pages 60-82, March.
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  3. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
  4. Stark, Oded & Lucas, Robert E B, 1988. "Migration, Remittances, and the Family," Economic Development and Cultural Change, University of Chicago Press, vol. 36(3), pages 465-81, April.
  5. Besancenot, Damien & Faria, Joao Ricardo & Vranceanu, Radu, 2008. "Why Business Schools Do So Much Research: A Signaling Explanation," ESSEC Working Papers DR 08002, ESSEC Research Center, ESSEC Business School.
  6. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
  7. Batista, Catia & Potin, Jacques, 2006. "Stages of Diversification and Capital Accumulation in an Heckscher-Ohlin World, 1975-1995," ESSEC Working Papers DR 06008, ESSEC Research Center, ESSEC Business School.
  8. 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.
  9. Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
  10. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  11. Weiss, Y. & Fershtman, C., 1997. "Social Status and Economic Performance: A Survey," Papers 19-97, Tel Aviv.
  12. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA).
  13. Batista, Catia & Potin, Jacques, 2008. "International Specialization and the Return to Capital, 1976-2000," ESSEC Working Papers DR 08001, ESSEC Research Center, ESSEC Business School.
  14. Funkhouser, Edward, 1995. "Remittances from International Migration: A Comparison of El Salvador and Nicaragua," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 137-46, February.
  15. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  16. Banerjee, Biswajit, 1984. "The probability, size and uses of remittances from urban to rural areas in India," Journal of Development Economics, Elsevier, vol. 16(3), pages 293-311, December.
  17. Ed Hopkins & Tatiana Kornienko, 2004. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," ESE Discussion Papers 92, Edinburgh School of Economics, University of Edinburgh.
  18. Ken Clark & Stephen Drinkwater, 2007. "An Investigation Of Household Remittance Behaviour: Evidence From The United Kingdom," Manchester School, University of Manchester, vol. 75(6), pages 717-741, December.
  19. Riley, John G, 1979. "Informational Equilibrium," Econometrica, Econometric Society, vol. 47(2), pages 331-59, March.
  20. Patel, Krishna & Vella, Francis, 2007. "Immigrant Networks and Their Implications for Occupational Choice and Wages," IZA Discussion Papers 3217, Institute for the Study of Labor (IZA).
  21. Harbaugh, William T, 1998. "The Prestige Motive for Making Charitable Transfers," American Economic Review, American Economic Association, vol. 88(2), pages 277-82, May.
  22. Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-71, September.
  23. Baroni, Michel & Barthélémy, Fabrice & Mokrane, Mahdi, 2004. "The Paris Residential Market: Driving Factors and Market Behaviour 1973-2001," ESSEC Working Papers DR 04006, ESSEC Research Center, ESSEC Business School.
  24. 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.
  25. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  26. repec:hal:journl:halshs-00318870 is not listed on IDEAS
  27. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
  28. Baroni, Michel & Barthélémy, Fabrice & Mokrane, Mahdi, 2005. "A PCA Factor Repeat Sales Index (1973-2001) To Forecast Apartment Prices in Paris (France)," ESSEC Working Papers DR 05002, ESSEC Research Center, ESSEC Business School.
  29. Ireland, Norman J., 1994. "On limiting the market for status signals," Journal of Public Economics, Elsevier, vol. 53(1), pages 91-110, January.
  30. John G. Riley, 1974. "Competitive Signalling," UCLA Economics Working Papers 050, UCLA Department of Economics.
  31. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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