Garbage in, Gospel Out? Controlling for the Underreporting of Remittances
International Monetary Fund, Sep 1, 2008 - Business & Economics - 19 pages
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.
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Acosta age of working-age amount of remittances average age BadHouse capital censored at zero censored regression model censored-at-zero coefficient conditioning variables control variables corruption countries data from Armenia determinant of remittances dram Dummy variables E[ui econometric model effect of remittances El Salvador exponential distribution family ties observed ﬂow Freund and Spatafora Grigorian and Melkonyan household head ILSMS impact of remittances incentives income indicator variable inﬂation INTERNATIONAL MONETARY FUND labor force participation labor market labor supply equation labor supply model larger households likelihood ratio test literature log likelihood Maximum likelihood estimation microeconomic migration and remittances non-capital urban normally distributed Number of household obstacle for rising parameter Percent of household Pr(Ri presence of migrants random variable receiving families receiving remittances regressor remaining household members remittance equation remittance flows remittances in Armenia remittances on labor remittances reduce result sample self-employment squared value survey underreport remittances unemployment vector Yerevan