Hidden Income and the Perceived Returns to Migration

74 Pages Posted: 5 Mar 2020 Last revised: 26 Jul 2022

See all articles by Travis Baseler

Travis Baseler

University of Rochester - Department of Economics

Date Written: July 25, 2022

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% over two years.

Keywords: migration, hidden income, urban-rural income gap

JEL Classification: J61, R12, R23, O15, D82, D83, D84

Suggested Citation

Baseler, Travis, Hidden Income and the Perceived Returns to Migration (July 25, 2022). Available at SSRN: https://ssrn.com/abstract=3534715 or http://dx.doi.org/10.2139/ssrn.3534715

Travis Baseler (Contact Author)

University of Rochester - Department of Economics ( email )

Harkness Hall
Rochester, NY 14627
United States

HOME PAGE: http://travisbaseler.com

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