How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand
AbstractPacific Island economies are some of the most remittance- dependent in the world. Proposals to lower the costs of sending money across borders are a core recommendation of recent international studies that aim to enhance the development impact of remittances. The potential increase in remittances that recipient countries can expect from such policies depends critically on the sensitivity of remittance transfers to the costs of remitting. This paper provides the first estimates of the cost-elasticity of remittances, using data from a survey of Tongan migrants in New Zealand. The costs of remitting to Tonga are high by international standards and remittances are found to have a negative cost-elasticity with respect to the fixed fee component of money transfer costs. These findings suggest that Pacific Island countries can expect a more than proportionate increase in remittances from a reduction in costs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 06/02.
Length: 29 pages
Date of creation: 31 Mar 2006
Date of revision:
Contact details of provider:
Postal: Private Bag 3105, Hamilton, New Zealand, 3240
Phone: + 64 (0)7 838 4758 (Administrator)
Fax: + 64 7 838 4331
Web page: http://cms.mngt.waikato.ac.nz/departments/economics
More information through EDIRC
remittances; cost elasticity; Tonga;
Find related papers by JEL classification:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-17 (All new papers)
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.:
- Brown, Richard P. C., 1997. "Estimating remittance functions for Pacific Island Migrants," World Development, Elsevier, vol. 25(4), pages 613-626, January.
- Rapoport, Hillel & Docquier, Frédéric, 2005.
"The Economics of Migrants’ Remittances,"
IZA Discussion Papers
1531, Institute for the Study of Labor (IZA).
- Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
- David McKenzie & John Gibson & Steven Stillman, 2007.
"Moving to Opportunity, Leaving Behind What? Evaluating the Initial Effects of a Migration Policy on Incomes and Poverty in Source Areas,"
Working Papers in Economics
07/23, University of Waikato, Department of Economics.
- David McKenzie & John Gibson & Steven Stillman, 2007. "Moving to opportunity, leaving behind what? Evaluating the initial effects of a migration policy on incomes and poverty in source areas," New Zealand Economic Papers, Taylor and Francis Journals, vol. 41(2), pages 197-223.
- John Gibson & Geua Boe-Gibson & Halahingano Rohorua & David McKenzie, 2007. "Efficient remittance services for development in the Pacific," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 14(2), pages 55-74, December.
- Suhas Ketkar & Dilip Ratha, 2009. "Innovative Financing for Development," World Bank Publications, The World Bank, number 6549, September.
- Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications, The World Bank, number 13092, September.
- Mohapatra, Sanket & Ratha, Dilip, 2010.
"Forecasting migrant remittances during the global financial crisis,"
Policy Research Working Paper Series
5512, The World Bank.
- Sanket Mohapatra & Dilip Ratha, 2010. "Forecasting migrant remittances during the global financial crisis," Migration Letters, Migration Letters and The London Publishers, London, UK, vol. 7(2), pages 203-213, October.
- John Gibson & David McKenzie, 2008.
"Preliminary Impacts of a New Seasonal Work Program on Rural Household Incomes in the Pacific,"
Working Papers in Economics
08/18, University of Waikato, Department of Economics.
- Gibson, John & McKenzie, David, 2009. "Preliminary Impacts of a New Seasonal Work Program on Rural Household Incomes in the Pacific," 2009 Conference, August 16-22, 2009, Beijing, China 50101, International Association of Agricultural Economists.
- Bettin, Giulia & Lucchetti, Riccardo & Zazzaro, Alberto, 2012.
"Endogeneity and sample selection in a model for remittances,"
Journal of Development Economics,
Elsevier, vol. 99(2), pages 370-384.
- Giulia BETTIN & Riccardo LUCCHETTI & Alberto ZAZZARO, 2011. "Endogeneity and sample selection in a model for remittances," Working Papers 361, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- John Gibson & David McKenzie & Steven Stillman, 2011.
"The Impacts of International Migration on Remaining Household Members: Omnibus Results from a Migration Lottery Program,"
The Review of Economics and Statistics,
MIT Press, vol. 93(4), pages 1297-1318, November.
- Gibson, John & McKenzie, David & Stillman, Steven, 2009. "The Impacts of International Migration on Remaining Household Members: Omnibus Results from a Migration Lottery Program," IZA Discussion Papers 4375, Institute for the Study of Labor (IZA).
- John Gibson & David McKenzie & Steven Stillman, 2009. "The Impacts of International Migration on Remaining Household Members: Omnibus Results from a Migration Lottery Program," CReAM Discussion Paper Series 0920, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Gibson, John & McKenzie, David & Stillman, Steven, 2009. "The impacts of international migration on remaining household members : omnibus results from a migration lottery program," Policy Research Working Paper Series 4956, The World Bank.
- Richard P.C. Brown & Eliana V. Jimenez, 2008. "A Mixed-Motives Model of Private Transfers with Subjectively-Assessed Recipient Need: Evidence from a Poor, Transfer-Dependent Economy," Discussion Papers Series 365, School of Economics, University of Queensland, Australia.
- Beck, Thorsten & Peria, Maria Soledad Martinez, 2009. "What explains the cost of remittances ? an examination across 119 country corridors," Policy Research Working Paper Series 5072, The World Bank.
- Ratha, Dilip & Mohapatra, Sanket & Plaza, Sonia, 2008. "Beyond aid : new sources and innovative mechanisms for financing development in Sub-Saharan Africa," Policy Research Working Paper Series 4609, The World Bank.
- McKenzie, David, 2007.
"Paper Walls Are Easier to Tear Down: Passport Costs and Legal Barriers to Emigration,"
Elsevier, vol. 35(11), pages 2026-2039, November.
- McKenzie, David J., 2005. "Paper walls are easier to tear down : passport costs and legal barriers to emigration," Policy Research Working Paper Series 3783, The World Bank.
- Thorsten Beck & Asli Demirgüç-Kunt, 2008. "Access to Finance: An Unfinished Agenda," World Bank Economic Review, World Bank Group, vol. 22(3), pages 383-396, November.
- Wasana Karunarathne & John Gibson, 2013. "Financial Literacy and Remittance Behavior of Skilled and Unskilled Immigrant Groups in Australia," Department of Economics - Working Papers Series 1170, The University of Melbourne.
- Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all?: Policies and pitfalls in expanding access," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3508393, Tilburg University.
- World Bank, 2005. "Global Economic Prospects 2006 : Economic Implications of Remittances and Migration," World Bank Publications, The World Bank, number 7306, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brian Silverstone).
If references are entirely missing, you can add them using this form.