The impact of liquidity constraints and imperfect commitment on migration decisions of offspring of rural households
(2010) , 28 p. pages
Files
MigrationChoices.pdf
Restricted Access - Adobe PDF
- 314.67 KB
Details
- Authors
- Abstract
- This paper presents a non-cooperative model of intra-household decision-making regarding investment in migration. It is shown that the combination of liquidity constraints and imperfect commitment are a source of underinvestment in migration. More precisely, we highlight that, if remittances are unenforceable as a repayment for parent s contribution in migration transaction costs, then both migrant and parent s liquidity constraints, rather than household s liquidity constraint as a whole, matter in determining the investment decision. Besides, the insurance motive for remittances is shown to generate divergence of interest over the characteristics of migration. This result calls for a theoretical approach that properly takes account of potential internalization problems, which the paper intends to o¤er. Plausibility checks of the model are provided by comparative statics whose outcomes are consistent with previous research on migration and remittances.
- Affiliations
Citations
Delpierre, M. (2010). The impact of liquidity constraints and imperfect commitment on migration decisions of offspring of rural households (CRED WP 2010/11). https://hdl.handle.net/2078.5/74504