The economic literature has highlighted how in the absence of income insurance risk averse households may voluntarily withdraw from credit markets, since contract terms may transfer too much risk to the household (Boucher, Carter, and Guirkinger, 2007). Therefore, households may forgo activities with higher expected income in favor of activities with less income variability across states of nature (Morduch, 1995). Recent literature has also evaluated how remittances provide households with insurance against income shocks (Yang and Choi, 2007; Rosenzweig and Stark, 1989) and how remittances may help households bypass financial intermediaries (Woodruff and Zenteno, 2001; Taylor, Rozelle, and de Brauw, 2003). There has been minimal attention, however, on how... |