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

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Author Info
Naiditch, Claire
Vranceanu, Radu

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Abstract

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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Publisher Info
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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Web page: http://www.elsevier.com/locate/inca/621171

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Related research
Keywords: Migrants Remittances Perfect Bayesian Equilibrium Labour supply Signaling Altruism;

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References listed on IDEAS
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  1. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
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  2. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July. [Downloadable!] (restricted)
  3. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Besancenot, Damien & Vranceanu, Radu, 2005. "Socially Efficient Managerial Dishonesty," ESSEC Working Papers DR 05005, ESSEC Research Center, ESSEC Business School. [Downloadable!]
  5. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Migration, Remittances, and Male and Female Employment Patterns," American Economic Review, American Economic Association, vol. 96(2), pages 222-226, May. [Downloadable!]
  6. 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.
  7. Riccardo Faini, 2006. "Remittances and the Brain Drain," IZA Discussion Papers 2155, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec.. [Downloadable!] (restricted)
  9. Roberta Gatti, 2005. "Family Altruism and Incentives," Scandinavian Journal of Economics, Blackwell Publishing, vol. 107(1), pages 67-81, 03. [Downloadable!] (restricted)
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  10. 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. [Downloadable!] (restricted)
  11. Stephen Drinkwater & Paul Levine & Emanuela Lotti, 2006. "Labour Market and Investment Effects of Remittances," Department of Economics Discussion Papers 1906, Department of Economics, University of Surrey. [Downloadable!]
  12. 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. [Downloadable!]
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  13. Ernesto López Córdova, 2004. "Globalization, Migration and Development: The Role of Mexican Migrant Remittances," Econometric Society 2004 Latin American Meetings 82, Econometric Society. [Downloadable!]
  14. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August. [Downloadable!] (restricted)
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  1. Naiditch, Claire & Vranceanu, Radu, 2009. "Migratory equilibria with invested remittances," ESSEC Working Papers DR 09002, ESSEC Research Center, ESSEC Business School. [Downloadable!]
    Other versions:
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