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Working Paper

Asymmetric Information about Migrant Earnings and Remittance Flows

BORROWER REMITTANCE TRANSFER HOUSEHOLD TRANSFERS OPTIMAL CONTRACTS FAMILY TIES INFORMATIONAL ASYMMETRIES UTILITY FUNCTIONS LAGS DISPOSABLE INCOME SPOUSE INCOME INTEREST EXPECTATIONS REMITTANCE EXCHANGE OPTION LEVELS OF EDUCATION DEVELOPING COUNTRIES BUS OPERATOR VARIATION IN REMITTANCES POLITICAL ECONOMY IMMIGRANTS POSITIVE COEFFICIENT CDS OPTIMIZATION INCENTIVES FAMILY MEMBERS LOAN POLICY DISCUSSIONS VARIABLES ASYMMETRIC INFORMATION DEBT CONTRACTS SOCIAL CONTROL LOAN DECISIONS USES OF REMITTANCES REMITTANCE FLOWS ANNUAL REMITTANCES LOAN CONTRACT INTERNATIONAL BANK CENTER FOR DEVELOPMENT LENDER OPTIMAL CONTRACT SPOUSES REPAYMENT SCHEDULE WORK EXPERIENCE KNOWLEDGE DEVELOPMENT INTERNATIONAL MIGRATION LABOR MARKET URBAN MIGRATION PARTICIPATION CONSTRAINT DEVELOPMENT ECONOMICS FINANCIAL STUDIES INCOME SHOCK CONTRACTS IMMIGRATION POLICIES FINANCES MIGRATION TRANSFERS DEBT MARKETS HOUSEHOLD INCOME NUMBER OF MIGRANTS RETURN LOTTERY INCOME LEVELS UTILITY MIGRANTS AVERAGING REMITTANCE USE FINANCE RESPECT INFORMATION ASYMMETRY PROGRESS EXPENDITURE TRANSACTION INVESTORS CONSUMPTION INFORMATIONAL ASYMMETRY MIGRANT GOOD POLICIES DERIVATIVE REMITTANCE RECIPIENTS FUTURE POLICY RESEARCH WORKING PAPER VALUE INCOME SHOCKS RETURNS EXCHANGES WORKSHOP RECIPIENT HOUSEHOLDS CONTRACT REPAYMENT INCOMES PROPERTY SOCIAL NETWORKS PROPERTIES MIGRANT WORKERS MEASUREMENT SHARES TRANSACTION COSTS MARKET TEMPORARY MIGRANTS INTERNAL MIGRANTS TEMPORARY MIGRATION BULLETIN MASCULINITY ECONOMICS POLICY COLLECTIVE REMITTANCES HUSBANDS INSURANCE GDP GOODS INVESTOR INVESTMENT EXPECTED UTILITY SHARE FINANCIAL INFORMATION ILLNESS IMMIGRATION COMPETITIVE MARKETS POPULATION CHECK POLICY RESEARCH MIGRANT NETWORKS RISK AVERSION INHERITANCE REMITTANCES OUTCOMES MARKET RETURNS NEGATIVE INCOME SHOCKS GUARANTEE INCOME LEVEL ECONOMIC CONDITIONS EXTENDED FAMILY DEVELOPMENT POLICY
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World Bank, Washington, DC
Middle East and North Africa | South Asia
2015-08-17T19:15:46Z | 2015-08-17T19:15:46Z | 2015-07

This paper examine asymmetric information about migrant earnings and its implications for remittance behavior using a sample of Indian households with husbands working overseas in Qatar. On average, wives underreport their husbands’ income and underreporting is more prevalent in households with higher earning migrants. The discrepancy in earning reports is strongly correlated with variation in remittances: greater underreporting by wives is associated with lower remittances. An exchange model of remittances is developed with asymmetric information and costly state verification. The optimal remittance contract prescribes a threshold for remittances that invites verification only if unmet. The model’s predictions closely match our empirical findings.

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