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

  • Claire Naiditch

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

  • Radu Vranceanu

    ()

    (Economics Department - Essec Business School)

This paper analyzes the interaction between migrants income and remittances and between remittancesand the labor supply of residents. The model is cast as a two-period game with imperfect informationabout 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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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00318870.

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Date of creation: Mar 2009
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Handle: RePEc:hal:cesptp:halshs-00318870
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00318870
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  19. Besancenot, Damien & Vranceanu, Radu, 2005. "Socially Efficient Managerial Dishonesty," ESSEC Working Papers DR 05005, ESSEC Research Center, ESSEC Business School.
  20. Michael Spence, 2002. "Signaling in Retrospect and the Informational Structure of Markets," American Economic Review, American Economic Association, vol. 92(3), pages 434-459, June.
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