Garbage In, Gospel Out? Controlling for the Underreporting of Remittances

ByTigran A. Melkonyan, David A. Grigorian, J. Scott Shonkwiler

September 1, 2008

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Empirical studies that use self-reported data on remittances to measure the latter's impact on microeconomic incentives mostly ignore the potential errors associated with reporting/measurement issues. An econometric procedure to control for these errors is developed and applied to household-level data from Armenia. We find evidence of systematic under-reporting of remittances. After controlling for this, we find a strong negative impact of remittances on incentives to work.

Subject: Balance of payments, Income, Labor, Labor force participation, Labor supply, Migration, National accounts, Population and demographics, Remittances

Keywords: A. equation specification, dummy variable, Income, Labor force participation, Labor supply, measurement error, Middle East, Migration, model estimation, model specification, remittance equation, Remittances, WP

Pages:
19
Volume:
2008
DOI:
https://doi.org/10.5089/9781451870886.001
Issue:
230
Series:
Working Paper No. 2008/230
Stock No:
WPIEA2008230
ISBN:
9781451870886
ISSN:
1018-5941

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