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The Purpose of Remittances – Evidence from Germany

  • Thomas K. Bauer


  • Mathias G. Sinning

This paper examines the purpose of remittances using individual data of migrants in Germany. Particular attention is paid to migrants’ savings and transfers to family members in the home country. Our findings indicate that migrants who intend to stay in Germany only temporarily have a higher propensity to save and save larger amounts in their home country than permanent migrants. A similar picture emerges when considering migrants’ payments to family members abroad. The results of a decomposition analysis indicate that temporary and permanent migrants seem to have different preferences towards sending transfers abroad, while economic characteristics and the composition of households in home and host countries are less relevant.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0109.

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Length: 26 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:rwi:repape:0109
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  1. Edgard R. Rodriguez & Susan Horton, 1995. "International Return Migration and Remittances in the Philippines," Working Papers horton-95-01, University of Toronto, Department of Economics.
  2. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA).
  3. de la Briere, Benedicte & Sadoulet, Elisabeth & de Janvry, Alain & Lambert, Sylvie, 2002. "The roles of destination, gender, and household composition in explaining remittances: an analysis for the Dominican Sierra," Journal of Development Economics, Elsevier, vol. 68(2), pages 309-328, August.
  4. Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
  5. Christopher D. Carroll & Byung-Kun Rhee & Changyong Rhee, 1998. "Does Cultural Origin Affect Saving Behavior? Evidence from Immigrants," NBER Working Papers 6568, National Bureau of Economic Research, Inc.
  6. 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.
  7. 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.
  8. 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.
  9. repec:rwi:dpaper:0029 is not listed on IDEAS
  10. Cox, Donald & Eser, Zekeriya & Jimenez, Emmanuel, 1998. "Motives for private transfers over the life cycle: An analytical framework and evidence for Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 57-80, February.
  11. 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.
  12. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  13. repec:rwi:dpaper:0049 is not listed on IDEAS
  14. Merkle, Lucie & Zimmermann, Klaus F., 1992. "Savings, remittances, and return migration," Economics Letters, Elsevier, vol. 38(1), pages 77-81, January.
  15. Ronald Oaxaca, 1971. "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
  16. Francine D. Blau & John W. Graham, 1989. "Black-White Differences in Wealth and Asset Composition," NBER Working Papers 2898, National Bureau of Economic Research, Inc.
  17. Carroll, Christopher D & Rhee, Byung-Kun & Rhee, Changyong, 1994. "Are There Cultural Effects on Saving? Some Cross-Sectional Evidence," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 685-99, August.
  18. Galor, Oded & Stark, Oded, 1990. "Migrants' Savings, the Probability of Return Migration and Migrants' Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 463-67, May.
  19. Funkhouser, Edward, 1995. "Remittances from International Migration: A Comparison of El Salvador and Nicaragua," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 137-46, February.
  20. DeVoretz, Don J. & Vadean, Florin, 2005. "A Model of Foreign-Born Transfers: Evidence from Canadian Micro Data," IZA Discussion Papers 1714, Institute for the Study of Labor (IZA).
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