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Insurance motives to remit: Evidence from a matched sample of Ethiopian internal migrants

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  • de Brauw, Alan
  • Mueller, Valerie
  • Woldehanna, Tassew

Abstract

Migration and remittances can be used by rural households as a means of insurance, investment, and income augmentation. Ample attention has been given to studying international remittance flows, since for many countries such transfers comprise a significant fraction of income. Remittance flows from internal migrants are relatively understudied, particularly in Africa, where remittance rates are poor. We use a unique matched migrant sample to study what drives the low remittance rates in Ethiopia. Descriptive statistics suggest remitters are positively selected in terms of wealth characteristics compared with the average tracked migrant. Limited skill transferability and liquidity largely explain low remittance rates in Ethiopia. Weaker evidence suggests migrants are additionally motivated to remit as a form of self-insurance against own shocks to income and investments towards future inheritable assets.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1090.

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Date of creation: 2011
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Handle: RePEc:fpr:ifprid:1090

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Keywords: Insurance; Migration; Remittances;

This paper has been announced in the following NEP Reports:

References

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  1. 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.
  2. Osili, Una Okonkwo, 2007. "Remittances and savings from international migration: Theory and evidence using a matched sample," Journal of Development Economics, Elsevier, vol. 83(2), pages 446-465, July.
  3. Agnes Quisumbing & Scott McNiven, 2010. "Moving Forward, Looking Back: the Impact of Migration and Remittances on Assets, Consumption, and Credit Constraints in the Rural Philippines," Journal of Development Studies, Taylor & Francis Journals, vol. 46(1), pages 91-113.
  4. de la Briere, Benedicte & Sadoulet, Elisabeth & de Janvry, Alain & Lambert, Sylvie, 2002. "The roles of destination, gender, and household composition in explaining remittances: an analysis for the Dominican Sierra," Journal of Development Economics, Elsevier, vol. 68(2), pages 309-328, August.
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  6. Michael Clemens, 2010. "The Roots of Global Wage Gaps: Evidence from Randomized Processing of U.S. Visas," Working Papers 212, Center for Global Development.
  7. Dean Yang, 2011. "Migrant Remittances," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 129-52, Summer.
  8. Ilahi, Nadeem & Jafarey, Saqib, 1999. "Guestworker migration, remittances and the extended family: evidence from Pakistan," Journal of Development Economics, Elsevier, vol. 58(2), pages 485-512, April.
  9. Marcel Fafchamps & Bereket Kebede & Agnes R. Quisumbing, 2009. "Intrahousehold Welfare in Rural Ethiopia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(4), pages 567-599, 08.
  10. Dercon, Stefan & Hoddinott, John & Krishnan, Pramila & Woldehannnam, Tassew, 2008. "Collective action and vulnerability: Burial societies in rural Ethiopia," CAPRi working papers 83, International Food Policy Research Institute (IFPRI).
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  12. Kadiyala, Suneetha & Quisumbing, Agnes & Rogers, Beatrice & Webb, Patrick, 2009. "The Impact of Prime Age Adult Mortality on Child Survival and Growth in Rural Ethiopia," World Development, Elsevier, vol. 37(6), pages 1116-1128, June.
  13. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July.
  14. Du, Yang & Park, Albert & Wang, Sangui, 2005. "Migration and rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 688-709, December.
  15. Freund, Caroline & Spatafora, Nikola, 2008. "Remittances, transaction costs, and informality," Journal of Development Economics, Elsevier, vol. 86(2), pages 356-366, June.
  16. Dean Yang, 2006. "International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks," NBER Working Papers 12325, National Bureau of Economic Research, Inc.
  17. Gray, Clark & Mueller, Valerie, 2012. "Drought and Population Mobility in Rural Ethiopia," World Development, Elsevier, vol. 40(1), pages 134-145.
  18. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
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