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The impact of liquidity constraints and imperfect commitment on migration decisions of offspring of rural households

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Delpierre, Matthieu [UCL]

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 the parent’s contribution in migration transaction costs, then both the migrant and the parent’s liquidity constraints, rather than the 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 offer. Plausibility checks of the model are provided by comparative statics whose outcomes are consistent with previous research on migration and remittances.

Document type Article de périodique (Journal article) – Article de recherche
Access type Accès restreint
Publication date 2012
Language Anglais
Journal information "Review of Economics of the Household" - Vol. 10, no. 1, p. 153-170 (2012)
Peer reviewed yes
Publisher Springer New York LLC ((United States) New York)
issn 1569-5239
e-issn 1573-7152
Publication status Publié
Affiliation UCL - SST/ELI/ELIA - Agronomy
Links
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Bibliographic reference Delpierre, Matthieu. The impact of liquidity constraints and imperfect commitment on migration decisions of offspring of rural households. In: Review of Economics of the Household, Vol. 10, no. 1, p. 153-170 (2012)
Permanent URL http://hdl.handle.net/2078.1/107665