Income, consumption and remittances: Evidence from immigrants to Australia
For many countries, remittance behaviour by migrants is an important component of their overall international financial flows. To date, the empirical literature has analysed the propensity to remit as a function of migrants' socio-economic characteristics. However, no studies have fully addressed the empirical implications of remittance behaviour being determined in the broader context of migrants' labour, income and consumption allocation strategy. On the contrary, the migrant's income has almost always been treated as exogenous in this context. The aim of this study is to estimate a remittance equation that detects the main determinants of remittance behaviour while addressing endogeneity and reverse causality relationships between remittances, income, consumption and savings. Moreover, since a large share of individuals do not remit money at all, an instrumental variable variant of the double-hurdle selection model is proposed and estimated by LIML. A sending country perspective is adopted in the empirical analysis by considering the first cohort of the Longitudinal Survey of Immigrants to Australia. We find that endogeneity is substantial and that estimates obtained by the methods previously employed in the literature may be very misleading if given a behavioural interpretation. Our results confirm some theoretical predictions and shed light on others; notably, we show that selfish motives in remitters are at least as important as altruistic motives.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: Heimhuder Str. 71, D-20148 Hamburg|
Phone: +49 (0)40 34 05 76 - 0
Fax: +49 (0)40 34 05 76 - 776
Web page: http://www.hwwi.org/en/
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.:
- Brown, Richard P. C., 1997. "Estimating remittance functions for Pacific Island Migrants," World Development, Elsevier, vol. 25(4), pages 613-626, January.
- Hatton, Timothy J. & Williamson, Jeffrey G., 1998. "The Age of Mass Migration: Causes and Economic Impact," OUP Catalogue, Oxford University Press, number 9780195116519, December.
- 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.
- Marta Ruiz-Arranz & Paola Giuliano, 2005.
"Remittances, Financial Development, and Growth,"
IMF Working Papers
05/234, International Monetary Fund.
- Dean Yang & HwaJung Choi, 2005.
"Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines,"
535, Research Seminar in International Economics, University of Michigan.
- HwaJung Choi, 2007. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," World Bank Economic Review, World Bank Group, vol. 21(2), pages 219-248, May.
- Osili, Una Okonkwo, 2007. "Remittances and savings from international migration: Theory and evidence using a matched sample," Journal of Development Economics, Elsevier, vol. 83(2), pages 446-465, July.
- Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
- Giulia Bettin & Alberto Zazzaro, 2012.
"Remittances And Financial Development: Substitutes Or Complements In Economic Growth?,"
Bulletin of Economic Research,
Wiley Blackwell, vol. 64(4), pages 509-536, October.
- Giulia Bettin & Alberto Zazzaro, 2009. "Remittances and Financial Development:;Substitutes or Complements in Economic Growth?," Mo.Fi.R. Working Papers 28, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
- Esteves, Rui & Khoudour-Castéras, David, 2011.
"Remittances, capital flows and financial development during the mass migration period, 1870–1913,"
European Review of Economic History,
Cambridge University Press, vol. 15(03), pages 443-474, December.
- Rui Esteves & David Khoudour-Castéras, 2009. "Remittances, Capital Flows and Financial Development during the Mass Migration Period, 1870-1913," Working Papers 2009-12, CEPII research center.
- Yasser Abdih & Jihad Dagher & Peter Montiel, 2010.
"Remittances and Institutions: Are Remittances a Curse?,"
Center for Development Economics
2010-08, Department of Economics, Williams College.
- Abdih, Yasser & Chami, Ralph & Dagher, Jihad & Montiel, Peter, 2012. "Remittances and Institutions: Are Remittances a Curse?," World Development, Elsevier, vol. 40(4), pages 657-666.
- Jihad Dagher & Ralph Chami & Peter J Montiel & Yasser Abdih, 2008. "Remittances and Institutions; Are Remittances a Curse?," IMF Working Papers 08/29, International Monetary Fund.
- Yasser Abdih & Jihad Dagher & Peter Montiel, 2010. "Remittances and Institutions: Are Remittances a Curse?," Department of Economics Working Papers 2010-13, Department of Economics, Williams College.
- Stark, Oded, 2009.
"Reasons for Remitting,"
52800, University of Bonn, Center for Development Research (ZEF).
- Jørgen Carling, 2008. "The determinants of migrant remittances," Oxford Review of Economic Policy, Oxford University Press, vol. 24(3), pages 582-599, Autumn.
- Donald Cox & Zekeriya Eser & Emmanuel Jimenez, 1996.
"Motives for Private Transfers over the Life Cycle: An Analytical Framework and Evidence for Peru,"
Boston College Working Papers in Economics
327., Boston College Department of Economics.
- 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.
- Merkle, Lucie & Zimmermann, Klaus F., 1992. "Savings, remittances, and return migration," Economics Letters, Elsevier, vol. 38(1), pages 77-81, January.
- Catrinescu, Natalia & Leon-Ledesma, Miguel & Piracha, Matloob & Quillin, Bryce, 2009.
"Remittances, Institutions, and Economic Growth,"
Elsevier, vol. 37(1), pages 81-92, January.
- Hoddinott, John, 1992. "Modelling Remittance Flows in Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 1(2), pages 206-32, August.
- Albert Bollard & David McKenzie & Melanie Morten, 2009.
"The Remitting Patterns of African Migrants in the OECD,"
CReAM Discussion Paper Series
0921, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Bollard, Albert & McKenzie, David & Morten, Melanie, 2010. "The remitting patterns of African migrants in the OECD," Policy Research Working Paper Series 5260, The World Bank.
- Ana Rute Cardoso & Elsa Fontainha & Chiara Monfardini, 2008.
"Children and parents time use: Empirical evidence on investment in human capital in France, Italy and Germany,"
CHILD Working Papers
wp17_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
- Cardoso, Ana Rute & Fontainha, Elsa & Monfardini, Chiara, 2008. "Children and Parents Time Use: Empirical Evidence on Investment in Human Capital in France, Italy and Germany," IZA Discussion Papers 3815, Institute for the Study of Labor (IZA).
- Niimi, Yoko & Ozden, Caglar, 2006. "Migration and remittances : causes and linkages," Policy Research Working Paper Series 4087, The World Bank.
- Rapoport, Hillel & Docquier, Frederic, 2006.
"The Economics of Migrants' Remittances,"
Handbook on the Economics of Giving, Reciprocity and Altruism,
- Ken Clark & Stephen Drinkwater, 2007. "An Investigation Of Household Remittance Behaviour: Evidence From The United Kingdom," Manchester School, University of Manchester, vol. 75(6), pages 717-741, December.
- Samir Jahjah & Ralph Chami & Connel Fullenkamp, 2003.
"Are Immigrant Remittance Flows a Source of Capital for Development?,"
IMF Working Papers
03/189, International Monetary Fund.
- Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
- Blundell, Richard William & Ham, John & Meghir, Costas, 1987.
"Unemployment and Female Labour Supply,"
CEPR Discussion Papers
149, C.E.P.R. Discussion Papers.
- Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 227-254, June.
- Banerjee, Biswajit, 1984. "The probability, size and uses of remittances from urban to rural areas in India," Journal of Development Economics, Elsevier, vol. 16(3), pages 293-311, December.
- 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.
- Jones, Andrew M, 1989. "A Double-Hurdle Model of Cigarette Consumption," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(1), pages 23-39, Jan.-Mar..
- Naufal, George S, 2007.
"Who Remits? The Case of Nicaragua,"
IZA Discussion Papers
3081, Institute for the Study of Labor (IZA).
- Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
- Blundell, Richard & Smith, Richard J., 1994. "Coherency and estimation in simultaneous models with censored or qualitative dependent variables," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 355-373.
- Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March.
- 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.
- 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.
- Sinning, Mathias, 2007.
"Determinants of Savings and Remittances: Empirical Evidence from Immigrants to Germany,"
IZA Discussion Papers
2966, Institute for the Study of Labor (IZA).
- Mathias Sinning, 2011. "Determinants of savings and remittances: empirical evidence from immigrants to Germany," Review of Economics of the Household, Springer, vol. 9(1), pages 45-67, March.
- Sinning, Mathias, 2007. "Determinants of Savings and Remittances – Empirical Evidence from Immigrants to Germany," Ruhr Economic Papers 23, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
- Papaioannou, Elias, 2008.
"What Drives International Financial Flows? Politics, Institutions and Other Determinants,"
CEPR Discussion Papers
7010, C.E.P.R. Discussion Papers.
- Papaioannou, Elias, 2009. "What drives international financial flows? Politics, institutions and other determinants," Journal of Development Economics, Elsevier, vol. 88(2), pages 269-281, March.
- White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January.
- Giulia Bettin & Riccardo Lucchetti, 2009. "Instrumental Variable Interval Regression," EHUCHAPS, Universidad del País Vasco - Facultad de Ciencias Económicas y Empresariales.
When requesting a correction, please mention this item's handle: RePEc:zbw:hwwirp:3-21. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.