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The Role of Remittances in Migration Decision: Evidence from Turkish Migration

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Author Info
Sule Akkoyunlu
Boriss Siliverstovs

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Abstract

In this study we analyse the impact of workers' remittances on the decision to migrate by means of cointegration analysis. In traditional migration theories, especially in human capital models, the decision to migrate is based upon comparison of expected future incomes in the sending and the receiving countries adjusted for the cost of migration. By contrast, the new economics of labour migration suggests that the migration decision is made jointly by the migrant and his family. One important element of this theory is the role of remittances that is absent in traditional migration theories. In this paper we test traditional migration theories against the new economics of labour migration. The study covers the Turkish migration to Germany over the period 1964-2004. A single cointegrating relation between the migration inflows and the relative income ratio between Germany and Turkey, the unemployment rates in Germany and Turkey, the trade intensity variable, and workers' remittances (relative to Turkish GDP) is found. We find workers' remittances to be significant in explaining migration both in the short- as well as in the long-run.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 691.

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Length: 23 p.
Date of creation: 2007
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Handle: RePEc:diw:diwwpp:dp691

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Related research
Keywords: Migration; trade; remittances; the new economic of migration; cointegration;

Find related papers by JEL classification:
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions

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  1. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244. [Downloadable!] (restricted)
  2. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January. [Downloadable!] (restricted)
  3. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
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  4. Mayda, Anna Maria, 2007. "International Migration: A Panel Data Analysis of the Determinants of Bilateral Flows," CEPR Discussion Papers 6289, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Assaf Razin & Efraim Sadka, 1997. "International Migration and International Trade," NBER Working Papers 4230, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Godfrey, Leslie G, 1978. "Testing for Higher Order Serial Correlation in Regression Equations When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1303-10, November. [Downloadable!] (restricted)
  7. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier. [Downloadable!] (restricted)
  8. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October. [Downloadable!] (restricted)
  9. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September. [Downloadable!] (restricted)
  10. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September. [Downloadable!] (restricted)
  11. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-53, September. [Downloadable!] (restricted)
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  12. Ralph Chami & Samir Jahjah & Connel Fullenkamp, 2003. "Are Immigrant Remittance Flows a Source of Capital for Development," IMF Working Papers 03/189, International Monetary Fund. [Downloadable!]
  13. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July. [Downloadable!] (restricted)
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