Hidden Income and the Perceived Returns to Migration
74 Pages Posted: 5 Mar 2020 Last revised: 26 Jul 2022
Date Written: July 25, 2022
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% over two years.
Keywords: migration, hidden income, urban-rural income gap
JEL Classification: J61, R12, R23, O15, D82, D83, D84
Suggested Citation: Suggested Citation