IDEAS home Printed from https://ideas.repec.org/p/irs/cepswp/2014-01.html
   My bibliography  Save this paper

Remittances, savings and return migration under uncertainty

Author

Listed:
  • DELPIERRE Matthieu
  • VERHEYDEN Bertrand

Abstract

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.

Suggested Citation

  • DELPIERRE Matthieu & VERHEYDEN Bertrand, 2014. "Remittances, savings and return migration under uncertainty," LISER Working Paper Series 2014-01, LISER.
  • Handle: RePEc:irs:cepswp:2014-01
    as

    Download full text from publisher

    File URL: https://www.liser.lu/publi_viewer.cfm?tmp=2530
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Dustmann, Christian & Fadlon, Itzhak & Weiss, Yoram, 2011. "Return migration, human capital accumulation and the brain drain," Journal of Development Economics, Elsevier, vol. 95(1), pages 58-67, May.
    3. 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.
    4. Alcaraz, Carlo & Chiquiar, Daniel & Salcedo, Alejandrina, 2012. "Remittances, schooling, and child labor in Mexico," Journal of Development Economics, Elsevier, vol. 97(1), pages 156-165.
    5. Calero, Carla & Bedi, Arjun S. & Sparrow, Robert, 2009. "Remittances, Liquidity Constraints and Human Capital Investments in Ecuador," World Development, Elsevier, vol. 37(6), pages 1143-1154, June.
    6. 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.
    7. 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.
    8. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
    9. Raymundo Campos-Vazquez & Jaime Lara, 2012. "Self-selection patterns among return migrants: Mexico 1990-2010," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-18, December.
    10. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    11. 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.
    12. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chabé-Ferret, Bastien & Machado, Joël & Wahba, Jackline, 2018. "Remigration intentions and migrants' behavior," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 56-72.
    2. Matthieu Delpierre & Arnaud Dupuy & Michel Tenikue & Bertrand Verheyden, 2017. "The education motive for migrant remittances - Theory and evidence from India," CREA Discussion Paper Series 17-13, Center for Research in Economic Analysis, University of Luxembourg.

    More about this item

    Keywords

    Remittances; savings; risk; return migration;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: http://edirc.repec.org/data/cepsslu.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.