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Social relations and remittances: Evidence from Canadian micro data

  • Vadean, Florin P.
  • DeVoretz, Don J.

This paper models transfers outside the household for both the Canadian- born and foreign-born Canadian populations in a traditional expenditure framework with an unique composition of goods to illustrate the special motivations to remit by immigrants. We theorise that remittances to persons outside the households represent transfers to maintain social relations with relatives and friends and religious/charitable remittances are expenditures which foster group membership. Using Canadian survey data we estimate transfer functions as part of a larger expenditure system and calculate Engel elasticities for remittances to persons and to charities by both the Canadian and foreign-born populations. We conclude that expenditures to enhance social relations with relatives and friends (i.e. remittances to persons) are a normal good for recent Asian immigrants and a luxury good for all other immigrants and Canadians. Moreover, Asian households are the only ones that remit significantly more of their total expenditures to persons upon arrival, compared to the Canadian reference group, and their remittance behaviour does not converse to that of Canadian-born over time. This latter fact indicates strong cultural differences within the remitting households, most probably due to the fact that Asian households have stronger social ties to their extended family. Finally, with the exception of lower income North American and European immigrant households, all other immigrant groups and Canadians generally consider group membership contributions (i.e. charitable remittances) as a greater necessity than inter-household transfers.

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Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 3-6.

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Date of creation: 2007
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Handle: RePEc:zbw:hwwirp:3-6
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  1. Thomas Bauer & Mathias Sinning, 2005. "The Savings Behavior of Temporary and Permanent Migrants in Germany," RWI Discussion Papers 0029, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  2. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 305-14, May.
  3. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  4. Shamsuddin, Abul F M & DeVoretz, Don J, 1998. "Wealth Accumulation of Canadian and Foreign-Born Households in Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(4), pages 515-33, December.
  5. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  6. 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.
  7. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  8. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  9. Dennis Ahlburg & Richard Brown, 1998. "Migrants' intentions to return home and capital transfers: A study of Tongans and Samoans in Australia," Journal of Development Studies, Taylor & Francis Journals, vol. 35(2), pages 125-151.
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