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

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

Millions 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.

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Bibliographic Details
Main Authors: McKenzie, David, Gibson, John, Stillman, Steven
Format: Policy Research Working Paper biblioteca
Language:English
Published: World Bank, Washington, DC 2007-03
Subjects:CHILD MORTALITY, CITIZEN, DEPENDENT CHILDREN, DESTINATION COUNTRY, DEVELOPING COUNTRIES, DIASPORA, DISTRIBUTION OF WAGES, EARNING, EARNINGS, EARNINGS DISTRIBUTION, EARNINGS OF IMMIGRANTS, ECONOMIC MIGRANTS, EMIGRATION, EMPLOYMENT PROBABILITIES, EMPLOYMENT STATUS, EXPECTED WAGE, EXTENDED FAMILY, FAMILY MEMBERS, FAMILY REUNIFICATION, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, IMMIGRANT, IMMIGRANTS, IMMIGRATION, IMMIGRATION QUOTA, INCOMES, JOB OFFER, JOB OFFERS, JOB OPPORTUNITIES, JOBS, LABOR MARKET, LABOR MARKET INFORMATION, LABOUR, LABOUR MARKET, LABOUR MARKET INFORMATION, LARGE NUMBER OF PEOPLE, LOTTERY, LOW EMPLOYMENT, MIGRANT, MIGRANT NETWORKS, MIGRATION, MIGRATION PROCESS, MOTHER, NEW ZEALAND DOLLARS, POLICY CHANGE, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POTENTIAL MIGRANTS, PROGRESS, PUBLIC POLICY, PUBLIC SECTOR WORKERS, REMITTANCE, REMITTANCES, RESPECT, SEX, SKILLED MIGRANTS, SOCIAL OPPORTUNITIES, SOCIAL PROBLEMS, SPOUSE, TELEVISION, UNEMPLOYMENT, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, WAGE DISTRIBUTION, WAGE GROWTH, WAGES, WEALTH, WORKERS, YOUNG PEOPLE,
Online Access:http://documents.worldbank.org/curated/en/2007/03/7405775/land-milk-honey-streets-paved-gold-emigrants-over-optimistic-expectations-incomes-abroad
http://hdl.handle.net/10986/7161
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Summary:Millions 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.

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