Remittances, savings and return migration under uncertainty
Recent empirical evidence links migrant remittances and return migration, and stresses the impact of uncertainty on migrant decisions. Theoretical analyses of the motives for remittances generally neglect these features, and do not include alternative strategies such as savings, which potentially have very different implications for both migrants and origin countries. This paper presents a model of endogenous remittances, savings and return decisions under uncertainty. This setting, which applies to long-term international migration, addresses the following questions. Which migrant characteristics affect their remittance-saving portfolio decisions? How do these decisions interact with migration success and return plans? In our framework, migrants make remittance and saving decisions at an early stage of migration, when migration success and return options are uncertain. Over time, information about professional prospects is acquired, and conditionally on past decisions, migrants adjust their return plans. We show that migrants anticipating a large wage in the host country, or a relatively low risk of migration failure are less likely to remit and to return, and more likely to save. These results are in line with recent empirical evidence, such as the large share of non-remitting migrants, the fact that migrants facing higher risks are more likely to remit, and the potentially poor economic performance of returnees. Finally, we provide a rationale for the support by relatives in the sending country of low-skill, illegal migration.
|Date of creation:||Feb 2014|
|Date of revision:|
|Contact details of provider:|| Postal: 11, Porte des Sciences, L-4366 Esch-sur-Alzette, G.-D. Luxembourg|
Phone: 00352 / 58 58 55 - 1
Fax: 00352 / 58 58 55 - 700
Web page: https://www.liser.lu
More information through EDIRC
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.:
- Gertrud Schrieder & Beatrice Knerr, 2000. "Labour Migration as a Social Security Mechanism for Smallholder Households in Sub-Saharan Africa: The Case of Cameroon," Oxford Development Studies, Taylor & Francis Journals, vol. 28(2), pages 223-236.
- Raymundo M. Campos Vázquez & Jaime Lara Lara, 2011.
"Self-Selection Patterns among Return Migrants: Mexico 1990-2010,"
Serie documentos de trabajo del Centro de Estudios Económicos
2011-09, El Colegio de México, Centro de Estudios Económicos.
- Raymundo Campos-Vazquez & Jaime Lara, 2012. "Self-selection patterns among return migrants: Mexico 1990-2010," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-18, December.
- Auriol, Emmanuelle & Demonsant, Jean-Luc, 2012.
"Education and migration choices in hierarchical societies: The case of Matam, Senegal,"
Regional Science and Urban Economics,
Elsevier, vol. 42(5), pages 875-889.
- Auriol, Emmanuelle & Demonsant, Jean-Luc, 2011. "Education and Migration Choices in Hierarchical Societies: The Case of Matam, Senegal," TSE Working Papers 11-236, Toulouse School of Economics (TSE).
- Auriol, Emmanuelle & Demonsant, Jean-Luc, 2011. "Education and Migration Choices in Hierarchical Societies: The Case of Matam, Senegal," CEPR Discussion Papers 8311, C.E.P.R. Discussion Papers.
- Auriol, Emmanuelle & Demonsant, Jean-Luc, 2011. "Education and Migration Choices in Hierarchical Societies: The Case of Matam, Senegal," IDEI Working Papers 672, Institut d'Économie Industrielle (IDEI), Toulouse, revised 0000.
- 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.
- Calero, Carla & Bedi, Arjun S. & Sparrow, Robert, 2009.
"Remittances, Liquidity Constraints and Human Capital Investments in Ecuador,"
Elsevier, vol. 37(6), pages 1143-1154, June.
- Calero, Carla & Bedi, Arjun S. & Sparrow, Robert, 2008. "Remittances, Liquidity Constraints and Human Capital Investments in Ecuador," IZA Discussion Papers 3358, Institute for the Study of Labor (IZA).
- Calero, C. & Bedi, A.S. & Sparrow, R.A., 2008. "Remittances, liquidity constraints and human capital investments in Ecuador," ISS Working Papers - General Series 18735, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
- Juan M. Gallego & Mariapia Mendola, 2013. "Labour Migration and Social Networks Participation in Southern Mozambique," Economica, London School of Economics and Political Science, vol. 80(320), pages 721-759, October.
- Giulia BETTIN & Riccardo LUCCHETTI & Alberto ZAZZARO, 2011.
"Endogeneity and sample selection in a model for remittances,"
361, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- 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.
- Mendola, Mariapia, 2008.
"Migration and technological change in rural households: Complements or substitutes?,"
Journal of Development Economics,
Elsevier, vol. 85(1-2), pages 150-175, February.
- Mariapia MENDOLA, 2005. "Migration and technological change in rural households: complements or substitutes?," Departmental Working Papers 2005-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Stark, Oded & Helmenstein, Christian & Yegorov, Yuri, 1997.
"Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration,"
44, Institute for Advanced Studies.
- Oded Stark & Christian Helmenstein & Yury Yegorov, 1997. "Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(3), pages 307-324, July.
- Carlo Alcaraz & Daniel Chiquiar & Alejandrina Salcedo, 2010.
"Remittances, Schooling, and Child Labor in Mexico,"
2010-14, Banco de México.
- Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
When requesting a correction, please mention this item's handle: RePEc:irs:cepswp:2014-01. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Library and Documentation)
If references are entirely missing, you can add them using this form.