Are Remittances Conflict-Abating in Recipient Countries?

This paper represents the first attempt to formalise the relationship between remittances inflow and social violence by developing a model which predicts that migrants’ remittances would lead to the reduction of social conflict in the recipient economy under the condition that remittances increase the average product of labour. Using homicides data as an indicator of social violence, we test our model’s prediction. Duly controlling for the endogeneity problem using appropriate instruments, we find that remittances tend to reduce social violence. We perform sensitivity analysis on remittances in the empirical model and find it robust with an unchanged negative sign.