Seshan, GaneshZubrickas, Robertas2015-08-172015-08-172015-07https://hdl.handle.net/10986/22452This paper examine asymmetric information about migrant earnings and its implications for remittance behavior using a sample of Indian households with husbands working overseas in Qatar. On average, wives underreport their husbands’ income and underreporting is more prevalent in households with higher earning migrants. The discrepancy in earning reports is strongly correlated with variation in remittances: greater underreporting by wives is associated with lower remittances. An exchange model of remittances is developed with asymmetric information and costly state verification. The optimal remittance contract prescribes a threshold for remittances that invites verification only if unmet. The model’s predictions closely match our empirical findings.en-USCC BY 3.0 IGOBORROWERREMITTANCE TRANSFERHOUSEHOLD TRANSFERSOPTIMAL CONTRACTSFAMILY TIESINFORMATIONAL ASYMMETRIESUTILITY FUNCTIONSLAGSDISPOSABLE INCOMESPOUSEINCOMEINTERESTEXPECTATIONSREMITTANCEEXCHANGEOPTIONLEVELS OF EDUCATIONDEVELOPING COUNTRIESBUS OPERATORVARIATION IN REMITTANCESPOLITICAL ECONOMYIMMIGRANTSPOSITIVE COEFFICIENTCDSOPTIMIZATIONINCENTIVESFAMILY MEMBERSLOANPOLICY DISCUSSIONSVARIABLESASYMMETRIC INFORMATIONDEBT CONTRACTSSOCIAL CONTROLLOAN DECISIONSUSES OF REMITTANCESREMITTANCE FLOWSANNUAL REMITTANCESLOAN CONTRACTINTERNATIONAL BANKCENTER FOR DEVELOPMENTLENDEROPTIMAL CONTRACTSPOUSESREPAYMENT SCHEDULEWORK EXPERIENCEKNOWLEDGEDEVELOPMENTINTERNATIONAL MIGRATIONLABOR MARKETURBAN MIGRATIONPARTICIPATION CONSTRAINTDEVELOPMENT ECONOMICSFINANCIAL STUDIESINCOME SHOCKCONTRACTSIMMIGRATION POLICIESFINANCESMIGRATIONTRANSFERSDEBTMARKETSHOUSEHOLD INCOMENUMBER OF MIGRANTSRETURNLOTTERYINCOME LEVELSUTILITYMIGRANTSAVERAGINGREMITTANCE USEFINANCERESPECTINFORMATION ASYMMETRYPROGRESSEXPENDITURETRANSACTIONINVESTORSCONSUMPTIONINFORMATIONAL ASYMMETRYMIGRANTGOODPOLICIESDERIVATIVEREMITTANCE RECIPIENTSFUTUREPOLICY RESEARCH WORKING PAPERVALUEINCOME SHOCKSRETURNSEXCHANGESWORKSHOPRECIPIENT HOUSEHOLDSCONTRACTREPAYMENTINCOMESPROPERTYSOCIAL NETWORKSPROPERTIESMIGRANT WORKERSMEASUREMENTSHARESTRANSACTION COSTSMARKETTEMPORARY MIGRANTSINTERNAL MIGRANTSTEMPORARY MIGRATIONBULLETINMASCULINITYECONOMICSPOLICYCOLLECTIVE REMITTANCESHUSBANDSINSURANCEGDPGOODSINVESTORINVESTMENTEXPECTED UTILITYSHAREFINANCIAL INFORMATIONILLNESSIMMIGRATIONCOMPETITIVE MARKETSPOPULATIONCHECKPOLICY RESEARCHMIGRANT NETWORKSRISK AVERSIONINHERITANCEREMITTANCESOUTCOMESMARKET RETURNSNEGATIVE INCOME SHOCKSGUARANTEEINCOME LEVELECONOMIC CONDITIONSEXTENDED FAMILYDEVELOPMENT POLICYWorking PaperWorld Bank10.1596/1813-9450-7368