Working Paper: NBER ID: w20986
Authors: Thomas Joseph Yaw Nyarko; Shingyi Wang
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.
Keywords: remittances; migrants; asymmetric information; income fluctuations; labor reform
JEL Codes: F22; F24; J60; O15; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| migrant earnings in the UAE (F24) | observability of income (D31) |
| observability of income (D31) | remittance behavior (F24) |
| migrant earnings in the UAE (F24) | remittances (F24) |
| labor reform (J89) | remittances (F24) |
| seasonal earnings fluctuations (E32) | remittances (F24) |
| weather shocks (Q54) | remittances (F24) |
| weather shocks (Q54) | migrant earnings in the UAE (F24) |
| Ramadan (Y60) | migrant earnings in the UAE (F24) |
| Ramadan (Y60) | remittances (F24) |