European Business Schools Librarian's Group

ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

No DR 09015: Remittances as a Social Status Signaling Device

Claire Naiditch () and Radu Vranceanu ()
Additional contact information
Claire Naiditch: CES-Matisse University Paris 1, Postal: 106-112 boulevard de l'Hôpital, 75647 PARIS cedex 13, FRANCE
Radu Vranceanu: ESSEC Business School, Postal: Avenue Bernard Hirsch - BP 50105, 95021 CERGY-PONTOISE, FRANCE

Abstract: Like all human beings, migrants may have a concern about their prestige or social status in the eyes of left home family and friends. They can remit money in order to signal their economic success and increase their status. We show that, if migrants' income is private information, unsuccessful migrants might accept a worsening of their living conditions and send back home large amounts of remittances only in order to make residents believe that they are successful. In some cases, successful migrants can signal their true favorable economic situation by remitting an even larger amount.

Keywords: Imperfect Information; Poverty; Remittances; Signaling

JEL-codes: D82; F24; O15; Z13

25 pages, December 2009

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