A Land of Milk and Honey with Streets Paved with Gold : Do Emigrants Have Over-Optimistic Expectations about Incomes Abroad?

Gibson, JohnMcKenzie, DavidStillman, Steven2012-06-052012-06-052007-03https://hdl.handle.net/10986/7161Millions of people emigrate every year in search of better economic and social opportunities. Anecdotal evidence suggests that emigrants may have over-optimistic expectations about the incomes they can earn abroad, resulting in excessive migration pressure, and in disappointment among those who do migrate. Yet there is almost no statistical evidence on how accurately these emigrants predict the incomes that they will earn working abroad. In this paper the authors combine a natural emigration experiment with unique survey data on would-be emigrants' probabilistic expectations about employment and incomes in the migration destination. Their procedure enables them to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country. The authors find a significant underestimation of both unconditional and conditional labor earnings at all points in the distribution. This underestimation appears driven in part by potential migrants placing too much weight on the negative employment experiences of some migrants, and by inaccurate information flows from extended family, who may be trying to moderate remittance demands by understating incomes.CC BY 3.0 IGOCHILD MORTALITYCITIZENDEPENDENT CHILDRENDESTINATION COUNTRYDEVELOPING COUNTRIESDIASPORADISTRIBUTION OF WAGESEARNINGEARNINGSEARNINGS DISTRIBUTIONEARNINGS OF IMMIGRANTSECONOMIC MIGRANTSEMIGRATIONEMPLOYMENT PROBABILITIESEMPLOYMENT STATUSEXPECTED WAGEEXTENDED FAMILYFAMILY MEMBERSFAMILY REUNIFICATIONHOUSEHOLD INCOMEHOUSEHOLD SURVEYIMMIGRANTIMMIGRANTSIMMIGRATIONIMMIGRATION QUOTAINCOMESJOB OFFERJOB OFFERSJOB OPPORTUNITIESJOBSLABOR MARKETLABOR MARKET INFORMATIONLABOURLABOUR MARKETLABOUR MARKET INFORMATIONLARGE NUMBER OF PEOPLELOTTERYLOW EMPLOYMENTMIGRANTMIGRANT NETWORKSMIGRATIONMIGRATION PROCESSMOTHERNEW ZEALAND DOLLARSPOLICY CHANGEPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOTENTIAL MIGRANTSPROGRESSPUBLIC POLICYPUBLIC SECTOR WORKERSREMITTANCEREMITTANCESRESPECTSEXSKILLED MIGRANTSSOCIAL OPPORTUNITIESSOCIAL PROBLEMSSPOUSETELEVISIONUNEMPLOYMENTUNEMPLOYMENT RATEUNEMPLOYMENT RATESWAGE DISTRIBUTIONWAGE GROWTHWAGESWEALTHWORKERSYOUNG PEOPLEA Land of Milk and Honey with Streets Paved with Gold : Do Emigrants Have Over-Optimistic Expectations about Incomes Abroad?World Bank10.1596/1813-9450-4141