Remittances and Rashomon

Center for Global Development Working Paper No. 285

31 Pages Posted: 23 Feb 2012

See all articles by Devesh Kapur

Devesh Kapur

University of Pennsylvania - Center for the Advanced Study of India; Center for Global Development

Randall Akee

IZA Institute of Labor Economics

Date Written: January 24, 2012

Abstract

Utilizing a novel data set on remittance data for India that matches household surveys to administrative bank data, we investigate the differences in self-reported and actual deposits to Non-Resident Indian (NRI) accounts. There is a striking difference between the perceived and actual frequency, as well as the amount of deposits, to NRI accounts. Our results indicate the presence of non-classical measurement error in the reporting of remittances in the form of deposits to NRI accounts. As a consequence, regression analyses using remittances as an explanatory variable may contain large upward biases instead of the usual attenuation of results under classical measurement error. Instrumental variables estimates are no better; the estimated coefficients from these regressions are more than three times the size of the OLS regression results. The results point to the need to more carefully check the accuracy of the international remittance flows. The wide discrepancies in the Indian case could be both because of inaccuracies in the household survey as well as mis-classification of the Balance of Payment data with some fraction of reported remittances being disguised capital flows (and hence likely to be less stable) rather than current account flows for family maintenance.

Keywords: Remittances, Measurement Error, Migration

Suggested Citation

Kapur, Devesh and Akee, Randall, Remittances and Rashomon (January 24, 2012). Center for Global Development Working Paper No. 285, Available at SSRN: https://ssrn.com/abstract=2009377 or http://dx.doi.org/10.2139/ssrn.2009377

Devesh Kapur

University of Pennsylvania - Center for the Advanced Study of India ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://www.sas.upenn.edu/casi/about/devesh.html

Center for Global Development

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Randall Akee (Contact Author)

IZA Institute of Labor Economics ( email )

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Germany

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