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

Author

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  • Claire Naiditch

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Radu Vranceanu

    (ESSEC Business School)

Abstract

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.

Suggested Citation

  • Claire Naiditch & Radu Vranceanu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Post-Print halshs-00318870, HAL.
    • Handle: RePEc:hal:journl:halshs-00318870
    DOI: 10.1016/j.ecosys.2008.07.003
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00318870
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    Cited by:

    1. Serino, Moises Neil & Ratilla, Therese, 2018. "Do International Remittances Alleviate or Aggravate Poverty in Developing Countries?," Review of Socio-Economic Research and Development Studies, Visayas State University, Visayas Socio-Economic Research and Data Analytics Center (ViSERDAC) and Department of Economics (DOE), College of Management and Economics (CME), vol. 2(1), pages 43-64, December.
    2. Claire Naiditch & Radu Vranceanu, 2009. "Migratory Equilibria with Invested Remittances," Post-Print halshs-00376472, HAL.
    3. Naiditch, Claire & Vranceanu, Radu, 2011. "Remittances as a social status signaling device," Research in Economics, Elsevier, vol. 65(4), pages 305-318, December.
    4. Naiditch, Claire & Vranceanu, Radu, 2010. "Equilibrium migration with invested remittances: The EECA evidence," European Journal of Political Economy, Elsevier, vol. 26(4), pages 454-474, December.
    5. Termos, Ali & Naufal, George & Genc, Ismail, 2013. "Remittance outflows and inflation: The case of the GCC countries," Economics Letters, Elsevier, vol. 120(1), pages 45-47.
    6. Moises Neil V. Serino & Donghun Kim, 2011. "How Do International Remittances Affect Poverty In Developing Countries? A Quantile Regression Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(4), pages 17-40, December.
    7. Pan, Zehan & Xu, Wei & Wang, Guixin & Li, Sen & Yang, Chuankai, 2020. "Will remittances suppress or increase household income in the migrant-sending areas? Modeling the effects of remittances in rural China," China Economic Review, Elsevier, vol. 61(C).

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