Determinants of Workers’ Remittances in Bangladesh: An Empirical Study
The purpose of this paper is to identify macroeconomic determinants of inflow of workers’ remittances in the context of Bangladesh. We used a balanced panel dataset of bilateral remittance flows from 10 major host countries (of Bangladeshi migrants’) to Bangladesh over the 1993 to 2005 period. We found that income differential between host and home country is positively correlated with the inflow of remittances. We explained the above findings as an indication of altruistic motive to remit. On the other hand there are some indications of investment motive to remit in the dataset. Inflation differential between home and host country is also found to be negatively correlated with the inflow of remittances, indicating that higher inflation in home country relative to host country may have exerted some negative effect on workers’ remittances. Devaluation of domestic currency or (increase in exchange rate) appeared to be positively correlated with the flow of workers’ remittances in Bangladesh.
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