# **1 Introduction**

The number of workers moving across international borders for work is increasing. By 2013, international migrants accounted for over 12 percent of the total population in the global North, over six times the share in 1990 (UNDESA, 2015). The 2011 Gallup poll estimates that more than 1 billion people want to migrate abroad for temporary work (Esipova, Ray, and Publiese, 2011). Anecdotes and media reports abound on the risks these migrants are undertaking in search of a better life for themselves or their families. For example, more than 3,770 migrants died in the Mediterranean Sea in 2015 on their way to Europe (International Organization for Migration, 2015). In 2014, about 445 people died while trying to cross the US-Mexico border (Carroll, 2015). A high death toll is not the plight only of those who try to migrate illegally or who are forced to move. _The Guardian_ reports that almost 1,000 workers, all of whom were legal migrants from Nepal, India and Bangladesh, died in Qatar in 2012 and 2013 (Gibson, 2014).

The intense desire to migrate despite the risks has led policymakers to be concerned that potential migrants may have unrealistic expectations about migration. In countries like Nepal, where more than 7 percent of adult, working-age males leave the country for work abroad in a given year, there is great concern that they make the decision recklessly.<sup>1</sup> Policymakers and academics often have contradictory views on whether the level of observed migration is higher or lower than optimal. Policymakers believe that most potential migrants are misinformed – in particular, that they expect to earn more than they actually do upon migration and underestimate the risks of working abroad. Many policymakers also believe that potential migrants, knowingly or unknowingly, are trading off risks at unreasonably low prices to the extent that their experience is often termed exploitative.<sup>2</sup> Put together, these notions suggest that the observed rate of migration is higher than is optimal and that accurate information would lower the level.

Academic studies, on the other hand, find migration to be profitable and hugely beneficial for the marginal migrant and his or her family (see Bryan, Chowdhury, and Mobarak, 2014; McKenzie, Stillman, and Gibson, 2010, for a few examples). These studies suggest that the level of migration is suboptimal and that increased migration would be welfare improving. If anything, potential migrants’ beliefs about earnings and risks are pessimistic, which suppresses migration (as briefly suggested in Bryan, Chowdhury, and Mobarak, 2014). Alternatively, many academic studies assume that individuals are fully informed and have rational expectations about the conditions at their destinations, and attribute low levels of migration to high costs, monetary and otherwise (see Kennan and Walker, 2011; Morten and Oliveira, 2014; Morten, 2013; Shenoy, 2015, for example). This literature argues that the costs, most of which are fixed, keep migration sub-optimally low and give rise to a large spatial disparity in earnings.

In this paper, I investigate whether misinformation causes suboptimal levels of migration in the context of the migration of Nepali workers to Malaysia and the Persian Gulf countries. Given the concerns on the part of policymakers, I focus on how potential migrants’ beliefs on earnings and the mortality rate abroad, and the tradeoff between these two factors – the value of a statistical life (VSL) – affect migration.

Using data collected for this study, I find that potential migrants are indeed misinformed about potential earnings and mortality risk, but not always in a way that policymakers expect. Consistent with the widely held notions described above, inexperienced potential migrants, meaning those who have never before migrated abroad for work, overestimate their earning potential. Compared to experienced migrants – those who are better informed as they have migrated abroad for work before – they expect to earn 26 percent more. I argue that this estimate is a lower bound on the extent of misinformation as the pool of experienced migrants in my sample is likely to be selected from the higher end of the actual earnings distribution. This suggests that, even in a context where 15 percent of the households have a current migrant in one of these destinations, potential migrants can still be misinformed about

> 1An extreme example of the opinion of many policymakers is the following quote from an expert on Nepali migration: “They go without asking questions. They are not ready to listen. They just want to go. They never even bother to ask how much they will earn.” (Pattisson, 2013a). Though this statement may be an exaggeration, the view that potential migrants lack information or are misinformed is widely held.

> 2Migrants working at high-risk jobs for low wages has been dubbed a form of modern-day slavery. Several newspaper articles and commissioned research reports express this view (see Deen, 2013; The Asia Foundation, 2013, and other news articles quoted elsewhere in the paper).

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