Worker Remittances and Capital Flows to Developing Countries

Worker remittances constitute an increasingly important mechanism for the transfer of resources from developed to developing countries, and remittances are the second-largest source, behind foreign direct investment, of external funding for developing countries. Yet, literature on worker remittances has so far focused mainly on the impact of remittances on income distribution within countries, on the determinants of remittances at a micro-level, or on the effects of migration and remittances for specific countries or regions. The focus of this paper is thus on four questions: First, how important are worker remittances to developing countries in quantitative terms? Second, what are the determinants driving worker remittances? Third, how volatile are worker remittances to developing countries? Fourth, are remittances correlated to other capital flows? --remittances,capital flows,developing countries

Identifying the Motives of Migrant Philanthropy

Donations by migrants to community projects in their home countries ("collective remittances") help to provide local public goods and may promote economic development. We draw on the literatures on migrant remittances and on philanthropy in general to identify possible motives for collective remittances

Remittances and Household Consumption Instability in Developing Countries

This paper analyzes the impact of remittances on household consumption instability in developing countries on a large panel of developing countries. The four main results are the following: Firstly, remittances significantly reduce household consumption instability. Secondly, the insurance role played by remittances is highlighted: remittances dampen the effect of various sources of consumption instability in developing countries (natural disasters, agricultural shocks, discretionary fiscal policy). Thirdly, the insurance role played by remittances is more important in less financially developed countries. Fourthly, the overall stabilizing effect of remittances is mitigated when remittances over GDP exceed 8.5%.Remittances;consumption instability;Financial Development;shocks;threshold effects

Do Foreign Remittances Matter to Poverty and Inequality? Evidence from Vietnam

Empirical findings on the impacts of international remittances on poverty and inequality have not been consistent. This paper uses fixed-effect regression to estimate the impacts of foreign remittances on income and consumption of remittances-receiving households, and subsequently investigate the impacts of foreign remittances on poverty and inequality in Vietnam. It is found that receiving foreign remittances has increased household income and consumption remarkably, but decreased poverty slightly for the remittance recipients. In addition, foreign remittances have increased inequality, albeit at a small magnitude.

The Impact of Remittances on Education Attainment: Evidence From Dominican Republic

This paper will examine the relationship between remittances and education attainment focusing on Dominican Republic in 2002. This study will focus on households in Dominican Republic using surveys from IPUMS international and the data is cross-sectional. Sending remittances increases the income for households, which in return, influences the spending on education. The study of remittances is analyzed in a more cultural and social value rather than entirely economic. The dynamic and structure of a family is crucial when studying the effects of remittances in a developing country. Key findings from this analysis is that the relationship between education attainment and remittances are positively related and it is statistically significant according to this model. This study examines the family structure as well as the economic and social structure of Dominican Republic to understand the relationship between remittances and education attainment

Data corner: remittances

Recent data on remittances to Latin America, including remittances from New England.Emigrant remittances

What explains the cost of remittances ? an examination across 119 country corridors

Remittances are a sizeable source of external financing for developing countries. In the L’Aquila 2009 G8 Summit, leaders pledged to reduce the cost of remittances by half in 5 years (from 10 to 5 percent). Yet, empirically, little is known about what drives the cost of remittances. Using newly gathered data across 119 country corridors, this paper explores the factors that determine the cost of remittances. Considering average costs across all types of institutions, the authors find that corridors with larger numbers of migrants and more competition among remittances service providers exhibit lower costs. By contrast, remittance costs are higher in richer corridors and in corridors with greater bank participation in the remittances market. Comparing results across all banks and all money transfer operators separately, the analysis finds few significant differences. However, estimations for Western Union, a leading player in the remittances business, suggest that this firm’s prices are insensitive to competition.Population Policies,Remittances,Access to Finance,Debt Markets,Economic Theory&Research

Remittances and the Prevalence of Working Poor

This paper focuses on the relationships between remittances and the share of individuals working for less than 2$ US per day. It is based on an original panel dataset containing information related to remittances in about 80 developing countries and to the number of workers being paid less than 2 dollars per day as well. Even after factoring in the endogeneity of remittance inflows the results suggest that remittances lead to a decrease in the prevalence of working poor in receiving economies. This effect is stronger in a context of high macroeconomic volatility but is mitigated by the unpredictability of remittances: remittances are more effective to decreasing the share of working poor when they are easily predictable. Moreover, domestic finance and remittances appear as substitutes: remittances are less efficient in reducing the prevalence of working poor whenever finance is available.Working poor, Remittances, shocks, Financial Development

The Impact of Aid on Recipient Behavior: A Micro-Level Dynamic Analysis of Remittances, Schooling, Work, Consumption, Investment and Social Mobility in Nicaragua

Remittances are a very important source of income for many Nicaraguan families. More than 40% of all households receive remittances that on average amount to 12-15% of total household income in these households. More than 30% of these households receive remittances at least monthly, implying that it is a relatively stable source of income. This paper shows that remittances do tend to reduce the vulnerability of households and increase their upward social mobility, at least as long as the households do not depend too heavily on remittances. However, remittances also cause moral hazard problems. Nicaraguans tend to reduce their labor supply in response to more remittances, and they also tend to reduce their savings rates, both of which are detrimental to long run economic growth.Remittances, aid, Nicaragua