This research seminar is hosted by the Centre for Research into Accounting and Finance in Context (CRAFiC) at Sheffield University Management School in association with the Sheffield Institute for International Development (SIID) and the Migration Research Group (MRG) at the University of Sheffield
Professor Ira N. Gang, Rutgers University, USA
Ira N. Gang is a Professor of Economics at Rutgers University, USA. He published papers on development, migration and public policy, public choice, political economy and labor economics in leading economics journals. He was one of the founding editors of the Review of Development Economics, and is an Associate Editor/Editorial Board member of several journals, including the Journal of Population Economics. He is a Research Fellow at RWI, IZA, GLO, CReAM, and IOS.
We study the link between temporary international migration and informal economic activity in the home country using household level panel data from the world’s most remittance dependent country, Tajikistan. Our interest is in whether migration and remittances are a substitute for informal sector activity or a complement. Grounded in a long discussion in development economics about what features are captured and missed in survey data when one uses expenditure versus when using income, our measure of household informal activity is the gap between household reported income and reported expenditure. As with all surveys there are bound to be recollection issues but we argue that a large gap between reported expenditures and reported incomes suggests the presence of informal income. Our findings show that households with migrants exhibit significantly lower excess expenditure over income, our measure of informal sector activity, than non-migrant households. This holds, in particular, for remittance-receiving households. Households with current migrants and households with several migrants have significantly lower informal activity than non-migrant households or households that have migrants that have already returned home for whom no migrant is currently abroad.