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The Flow of Information in the Story of a Typical Expatriate Worker in the Gulf
Abstract
People are motivated to move by home country factors and/or destination country factors. A rational economic agent would follow a cost-benefit analysis when deciding to migrate. Both Neoclassical and the new economics of migration (NEM) agree that, to a large extent, the expected wage differential between the destination and home countries play a decisive role in the decision to move residence. Unexpected shocks in the destination country introduce risk factors that distort the expected wage and therefore could ultimately guide the migrant’s decision whether to stay or even to migrate in the first place. Shocks include macro-shocks, exogenous to the migrant, and micro-shocks which are endogenous and are directly linked to the migrant (for instance committing a crime). In the case of the Gulf Cooperation Council (GCC) countries, unexpected shocks to migrants are even more costly because they do not only include loss of income (loss of job) but also could potentially lead to their early return to their home countries. This paper examines potential income shocks to a typical migrant living in the Gulf region. In particular, we look at the story of a domestic worker from the Philippines who was forced to return back home. We focus our attention to the role of information asymmetry that, to a certain extent, played a main role in the early departure of the migrant. We examine the flow of information between four main players: host government, sponsor, embassy and migrant. The paper therefore offers direction for future areas of research, specifically in terms of data collection in the Gulf. In that sense, the paper is a methodological study. Further, the paper offers clear policy implications for labor exporting and importing countries. By default, policies of domestic workers and sponsorship directly control the number of foreign workers by regulating the access to domestic help. Further, with more uncertainty (unexpected shocks), expatriates (of whom domestic workers) are inclined to remit more and fast. Building on the policy implications of the paper, we argue that the host government (Gulf country) must effectively control the flow of information to the other parties. While introducing new regulations to adapt to the fast growing economies is important, disseminating those laws to a dynamic and very diverse population is quiet challenging but also crucial.
Discipline
Economics
Geographic Area
Gulf
Sub Area
None