Labor Market Information Provision and Job FairsService Sector Female Labor Preference

Transnational Principal-Agent Information Asymmetry in Remittance Management

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In Simple Words

When a parent works in a distant city and sends money home for school fees, they cannot easily verify if the money was spent on tuition or daily entertainment. Providing training or joint management tools to both the sender and receiver aligns their goals like a shared online bank account statement.

Indonesian migrants and their home families

Neither person trained
Group used for comparison
Migrant and family member trained
More savings in home family

Randomized predeparture training. Savings measured in the home family, not the overseas migrant. Single-person training arms omitted.

See source →Study conditions — Doi, McKenzie and Zia ↗

Research question

Geographic separation between overseas workers and origin-country household members creates information asymmetries regarding remittance usage, leading to misaligned financial goals and sub-optimal household savings.

Participants

Review of randomized field evaluations among transnational households across developing country migration corridors (including Indonesia, Qatar, and El Salvador).

Study Design

Randomized experimental studies evaluating joint versus individual financial education and financial control mechanisms.

Results

Joint financial education for migrants and home-country recipients raises total savings and remittances while boosting joint decision-making, whereas isolated individual training yields muted impacts on financial decision-making.

Takeaway

Require joint participation of both overseas migrants and home-country decision-makers when implementing financial education or remittance-channeling initiatives.

Source and citation

See source →

Related findings

  • Baseline Income Level Heterogeneity →Finance & microfinance

    Consider offering a budget-tracking tool to two workers: one struggling on a minimum wage with zero discretionary income, and another earning a higher salary with surplus cash available. The higher-earning worker can afford to send extra funds once given a tool to structure spending, whereas the lower-earning worker remains financially constrained regardless of budgeting support.

  • Labeled Remittances →Finance & microfinance

    Labeled remittances function like attaching a clear sticky note with an intended chore to cash given to a family member. Through a smartphone app, senders record a money transfer and send a notification with a specific category label (such as food, utility bills, or education) to the recipient, giving the sender a low-cost channel to signal spending intentions without enforcing physical lock-in.

  • Microfinance Credit Inelasticity in Transnational Households →Finance & microfinance

    Imagine a small store owner who already receives steady financial support from a relative working abroad. If a local bank offers them a high-interest business loan requiring rigid monthly repayments, they will pass on the loan offer because borrowing money creates debt risk when they already have access to reliable family funds.

  • Transnational Migrant Savings Control and Monitoring →Finance & microfinance

    Imagine a worker who wants to save money back home, but knows any cash sent directly will be spent by relatives on non-essentials. Giving the worker a bank account where they retain sole or joint legal control allows them to deposit savings safely while maintaining oversight from afar.