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Remittances, savings and return migration under uncertainty

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  • Matthieu Delpierre
  • Bertrand Verheyden

Abstract

Recent empirical evidence links migrant remittances, savings and return migration, and stresses the inaccuracy of return migration plans. This paper presents a model of endogenous remittances, savings and return decisions under uncertainty. In our framework, migrants make remittance and saving decisions at an early stage of migration, when their long term economic performance in the host country is still uncertain. Over time, information about professional prospects is acquired, and conditionally on past decisions, migrants adjust their return plans. We show that when migrants expect large gains from migration and face relatively low wage risks in the host country, they tend to remit less, save more and are less likely to return migrate. These results are in line with recent empirical evidence and provide a rationale for the support by relatives in the sending country of low-skill, illegal migration. JEL codes D13; D80; JE Copyright Delpierre and Verheyden; licensee Springer. 2014

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  • Matthieu Delpierre & Bertrand Verheyden, 2014. "Remittances, savings and return migration under uncertainty," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-43, December.
    • Handle: RePEc:spr:izamig:v:3:y:2014:i:1:p:1-43:10.1186/s40176-014-0022-7
    DOI: 10.1186/s40176-014-0022-7
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    Cited by:

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    2. Kaufmann, Marc & Machado, Joël & Verheyden, Bertrand, 2021. "Why Do Migrants Stay Unexpectedly? Misperceptions and Implications for Integration," IZA Discussion Papers 14155, Institute of Labor Economics (IZA).
    3. Karmaker, Shamal Chandra & Barai, Munim Kumar & Sen, Kanchan Kumar & Saha, Bidyut Baran, 2023. "Effects of remittances on renewable energy consumption: Evidence from instrumental variable estimation with panel data," Utilities Policy, Elsevier, vol. 83(C).
    4. Mallela, Keerti & Singh, Sunny Kumar & Srivastava, Archana, 2023. "Remittances, financial development, and income inequality: A panel quantile regression approach," International Economics, Elsevier, vol. 175(C), pages 171-186.
    5. Md. Qamruzzaman, 2023. "Does Environmental Degradation-Led Remittances Flow? Nexus between Environmental Degradation, Uncertainty, Financial Inclusion and Remittances Inflows in India and China," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 9-26, March.
    6. Chabé-Ferret, Bastien & Machado, Joël & Wahba, Jackline, 2018. "Remigration intentions and migrants' behavior," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 56-72.
    7. Charles Mawusi & Mohamed Abdallah & Mazhar Mughal, 2022. "Does Economic Uncertainty Foster Migrant Remittances? A Macro-Perspective from 53 Developing Countries," Working Papers hal-03725386, HAL.
    8. Effrosyni Adamopoulou & Ezgi Kaya, 2020. "Not just a work permit: EU citizenship and the consumption behaviour of documented and undocumented immigrants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1552-1598, November.
    9. Aaron Levi Garavito-Acosta & Maria Mercedes Collazos-Gaitan & Manuel Dario Hernandez-Bejarano & Enrique Montes-Uribe, 2019. "Migración internacional y determinantes de las remesas de trabajadores en Colombia," Borradores de Economia 1066, Banco de la Republica de Colombia.
    10. Matthieu Delpierre & Arnaud Dupuy & Michel Tenikue & Bertrand Verheyden, 2017. "The education motive for migrant remittances - Theory and evidence from India," DEM Discussion Paper Series 17-13, Department of Economics at the University of Luxembourg.
    11. Aurelian-Petruş PLOPEANU & Daniel HOMOCIANU, 2020. "Why would Romanian migrants from Western Europe return to their country of origin? Abstract: After conducting a survey among Romanian individuals left abroad, we analyze the particular influences rela," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 211-235, June.
    12. Charles Mawusi, 2021. "Economic Uncertainty and Remittances to Developing Economies: A System GMM Approach," Working Papers hal-03147813, HAL.

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    More about this item

    Keywords

    Remittances; Savings; Risk; Return migration;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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