Asymmetric Information and Remittances: Evidence from Matched Administrative Data
- American Economic Journal: Applied Economics (Forthcoming)
Using new large-scale, administrative data matching remittances and monthly payroll disbursals, we demonstrate how migrants’ earnings in the United Arab Emirates affect their remittances. We consider several types of income changes: Ramadan, weather shocks, a labor reform and returns to time in the UAE. We demonstrate that two key characteristics of the income changes that affect the income elasticity of remittances are the observability of the in- come and whether the income change is positive or negative. The results are consistent with a private information model where remittances are viewed as payments in an income-sharing contract.
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