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Determinants of Savings and Remittances: Empirical Evidence from Immigrants to Germany

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Author Info
Mathias Sinning () (RWI Essen and IZA)

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Abstract

This paper investigates the determinants of migrants' financial transfers to their home country using German data. A double-hurdle model is applied to analyze the determinants of the propensity to send transfers abroad and the amount of transfers. The findings reveal that return intentions positively affect financial transfers of immigrants to their home country. Moreover, while the effect of the household size on migrants' transfers abroad turns out to be significantly negative, remittances are higher if close relatives live in the sending country. Finally, Vuong-tests indicate that the double-hurdle model is the correct specification for the analysis of migrants' savings and remittances rather than the conventional Tobit model usually applied in the literature.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2966.

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Length: 30 pages
Date of creation: Aug 2007
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Handle: RePEc:iza:izadps:dp2966

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Related research
Keywords: international migration; savings; remittances; double-hurdle model;

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Find related papers by JEL classification:
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Thomas K. Bauer, & Deborah A. Cobb-Clark & Vincent Hildebrand & Mathias Sinning, 2007. "A Comparative Analysis of the Nativity Wealth Gap," Ruhr Economic Papers 0006, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
    Other versions:
  2. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1985. "The Strategic Bequest Motive," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1045-76, December. [Downloadable!] (restricted)
    Other versions:
  3. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!] (restricted)
  5. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June. [Downloadable!] (restricted)
  6. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February. [Downloadable!] (restricted)
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  12. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March. [Downloadable!] (restricted)
  13. Merkle, Lucie & Zimmermann, Klaus F., 1992. "Savings, remittances, and return migration," Economics Letters, Elsevier, vol. 38(1), pages 77-81, January. [Downloadable!] (restricted)
  14. Don J. DeVoretz & Florin P. Vadean, 2005. "A Model of Foreign-Born Transfers: Evidence from Canadian Micro Data," IZA Discussion Papers 1714, Institute for the Study of Labor (IZA). [Downloadable!]
  15. 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. [Downloadable!] (restricted)
  16. Leilanie Basilio & Thomas K. Bauer & Mathias Sinning, 2007. "Analyzing the Labor Market Activity of Immigrant Families in Germany," IZA Discussion Papers 2989, Institute for the Study of Labor (IZA). [Downloadable!]
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  17. Catalina Amuedo-Dorantes & Susan Pozo, 2002. "Precautionary Saving by Young Immigrants and Young Natives," Southern Economic Journal, Southern Economic Association, vol. 69(1), pages 48-71, July.
  18. 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. [Downloadable!] (restricted)
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  20. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  21. Thomas K. Bauer & Mathias Sinning, 2005. "The Savings Behavior of Temporary and Permanent Migrants in Germany," IZA Discussion Papers 1632, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  22. 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)
  23. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September. [Downloadable!] (restricted)
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  26. Carroll, Christopher D & Rhee, Byung-Kun & Rhee, Changyong, 1999. "Does Cultural Origin Affect Saving Behavior? Evidence from Immigrants," Economic Development and Cultural Change, University of Chicago Press, vol. 48(1), pages 33-50, October.
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  27. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-66, December.
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mathias Sinning, 2007. "Wealth and Asset Holdings of Immigrants in Germany," Ruhr Economic Papers 0030, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
    Other versions:
  2. Cobb-Clark, Deborah & Stillman, Steven, 2008. "Emigration and the Age Profile of Retirement among Immigrants," IZA Discussion Papers 3874, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Zaiceva, Anzelika & Zimmermann, Klaus F, 2007. "Children, Kitchen, Church: Does Ethnicity Matter?," CEPR Discussion Papers 6491, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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