A land of milk and honey with streets paved with gold: Do emigrants have over-optimistic expectations about incomes abroad?David McKenzie, John Gibson and Steven Stillman Journal of Development Economics, 2013, vol. 102, issue C, 116-127 Abstract: Millions of people emigrate every year in search of better opportunities. Anecdotes of emigrants with over-optimistic expectations about the incomes they can earn abroad suggest excessive migration pressure. Yet there is almost no statistical evidence on how accurately emigrants predict the incomes that they will earn working abroad. In this paper, we combine a natural emigration experiment with unique survey data on would-be emigrants' probabilistic expectations about employment and incomes in the migration destination. Our procedure enables us to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country. We find significant under-estimation of both unconditional and conditional labor earnings at all points in the distribution for males, but reasonably accurate expectations for females. This under-estimation appears driven in part by inaccurate information flows from extended family, by basing expectations on older cohorts, and by differences in the gender wage premium between source and origin countries. Keywords: Expectations; Migration; Natural experiment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:102:y:2013:i:c:p:116-127 DOI: 10.1016/j.jdeveco.2012.01.001 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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