Asymmetric Information and Remittances: Evidence from Matched Administrative Data

57 Pages Posted: 2 Mar 2015 Last revised: 5 May 2024

See all articles by Thomas Joseph

Thomas Joseph

Indian Institute of Management (IIMU), Udaipur

Yaw Nyarko

New York University - Leonard N. Stern School of Business - Department of Economics

Shing-Yi B. Wang

University of Pennsylvania - The Wharton School

Date Written: February 2015

Abstract

Using new data matching remittances and monthly payroll disbursals, we demonstrate how fluctuations in migrants' earnings in the United Arab Emirates affect their remittances. We consider three types of income fluctuations that are observable by families at home: seasonalities, weather shocks and a labor reform. Remittances move with all of these income changes. Remittances do not move with an individual's growth in earnings over time. The slope of the relationship between earnings and time in the UAE varies across individuals and is not easy to observe by families. Thus, a key characteristic that drives remittance behavior is the observability of income rather than other features of these fluctuations. The results are consistent with a private information model where remittances are viewed by the migrant worker as payments to their families in an income-sharing contract.

Suggested Citation

Joseph, Thomas and Nyarko, Yaw and Wang, Shing-Yi B., Asymmetric Information and Remittances: Evidence from Matched Administrative Data (February 2015). NBER Working Paper No. w20986, Available at SSRN: https://ssrn.com/abstract=2572145

Thomas Joseph (Contact Author)

Indian Institute of Management (IIMU), Udaipur ( email )

Mohanlal Sukhadia University Campus
Udaipur, Rajasthan 313001
India

Yaw Nyarko

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-8928 (Phone)
212-995-4186 (Fax)

Shing-Yi B. Wang

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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