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Endogeneity and sample selection in a model for remittances

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  • Bettin, Giulia
  • Lucchetti, Riccardo
  • Zazzaro, Alberto

Abstract

We estimate a remittance model in which we address endogeneity and reverse causality relationships between immigrants' remittances, pre-transfer income and consumption. In order to take into account the fact that a large share of individuals do not remit, instrumental variable variants of the double-hurdle and Heckit selection models are proposed and estimated by Limited Information ML; semiparametric extensions are considered as robustness checks. Our results for a sample of recent immigrants to Australia show that endogeneity is substantial and that estimates obtained by the methods previously employed in the literature may be misleading if given a behavioral interpretation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 99 (2012)
Issue (Month): 2 ()
Pages: 370-384

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Handle: RePEc:eee:deveco:v:99:y:2012:i:2:p:370-384

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Remittances; Migration; Selection models;

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Citations

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Cited by:
  1. Giulia Bettin & Riccardo Lucchetti, 2012. "Intertemporal Remittance Behaviour by Immigrants in Germany," SOEPpapers on Multidisciplinary Panel Data Research 505, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Elena AMBROSETTI & Eralba CELA & Tineke FOKKEMA, 2011. "The Remittances Behaviour of the Second Generation in Europe: Altruism or Self-Interest?," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 368, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Giulia Bettin & Andrea Filippo Presbitero & Nikola Spatafora, 2014. "Remittances and vulnerability in developing countries," Mo.Fi.R. Working Papers, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences 93, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  4. Lucchetti, Riccardo & Pigini, Claudia, 2014. "A simple and effective misspecification test for the double-hurdle model," Economics Letters, Elsevier, Elsevier, vol. 123(1), pages 75-78.
  5. Eralba CELA & Tineke FOKKEMA & Elena AMBROSETTI, 2012. "Links Between Transnationalism Integration and Duration of Residence: The Case of eastern European Migrants in Italy," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 386, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  6. 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).
  7. Bettin, Giulia & Lucchetti, Riccardo & Zazzaro, Alberto, 2012. "Financial development and remittances: Micro-econometric evidence," Economics Letters, Elsevier, Elsevier, vol. 115(2), pages 184-186.

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