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Hidden Income and the Perceived Returns to Migration

Author

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  • Travis Baseler

Abstract

In many developing economies, urban workers earn substantially more than rural workers with the same level of education. Why don't more rural workers migrate to cities? I use two field experiments in Kenya to show that low migration is partly due to underestimation of urban incomes, which is sustained by income hiding by migrants. Parents at the origin underestimate their migrant children's incomes by nearly half, and underestimation is greater when a migrant's remittance obligations are high. Providing information about urban earnings increases migration to the capital city by about 40 percent over two years.

Suggested Citation

  • Travis Baseler, 2023. "Hidden Income and the Perceived Returns to Migration," American Economic Journal: Applied Economics, American Economic Association, vol. 15(4), pages 321-352, October.
    • Handle: RePEc:aea:aejapp:v:15:y:2023:i:4:p:321-52
    DOI: 10.1257/app.20210571
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    Citations

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    Cited by:

    1. Batista, Catia & McKenzie, David, 2023. "Testing classic theories of migration in the lab," Journal of International Economics, Elsevier, vol. 145(C).
    2. Baysan, Ceren & Dar, Manzoor H. & Emerick, Kyle & Li, Zhimin & Sadoulet, Elisabeth, 2024. "The agricultural wage gap within rural villages," Journal of Development Economics, Elsevier, vol. 168(C).
    3. Frohnweiler, Sarah & Beber, Bernd & Ebert, Cara, 2023. "Delayed effects on migration intentions in an information provision experiment in Ghana," Ruhr Economic Papers 1050, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Fuchs, Andreas & Gröger, André & Heidland, Tobias & Wellner, Lukas, 2023. "The effect of foreign aid on migration: Global micro evidence from world bank projects," Kiel Working Papers 2257, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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