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Remittances and Income Smoothing

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  • Catalina Amuedo-Dorantes
  • Susan Pozo

Abstract

Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.582
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 3 (May)
Pages: 582-87

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:582-87

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  1. Dean Yang & HwaJung Choi, 2005. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," Working Papers 535, Research Seminar in International Economics, University of Michigan.
  2. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer, vol. 19(2), pages 227-254, June.
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Cited by:
  1. James Dzansi, 2013. "Do remittance inflows promote manufacturing growth?," The Annals of Regional Science, Springer, vol. 51(1), pages 89-111, August.
  2. Catalina Amuedo-Dorantes & Susan Pozo, 2012. "Remittance Income Volatility and Labor Supply in Mexico," Southern Economic Journal, Southern Economic Association, vol. 79(2), pages 257-276, October.
  3. Theodore Gerber & Karine Torosyan, 2013. "Remittances in the Republic of Georgia: Correlates, Economic Impact, and Social Capital Formation," Demography, Springer, vol. 50(4), pages 1279-1301, August.
  4. Kaczmarczyk, Pawel, 2013. "Money for Nothing? Ukrainian Immigrants in Poland and their Remitting Behaviors," IZA Discussion Papers 7666, Institute for the Study of Labor (IZA).

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