The Propensity to Remit: Macro and Micro Factors Driving Remittances to Central America and the Caribbean

35 Pages Posted: 15 Nov 2022

See all articles by Hussein Bidawi

Hussein Bidawi

International Monetary Fund (IMF)

Paola Aliperti F. Domingues

International Monetary Fund (IMF)

Chiara Fratto

International Monetary Fund (IMF)

N. Laframboise

International Monetary Fund (IMF)

Abstract

In contrast to expectations, remittances to Central America and the Caribbean (CAC) surprised positively during 2020 and 2021. This study revisits the key macro indicators driving remittances, looks at the heterogeneous impacts of the global financial crisis (GFC) and COVID shocks, then uses micro data from the U.S. Current Population Census to examine individual features of immigrant households and how this might affect the “propensity to remit”. The paper finds that remittance flows are responsive to both sending and receiving country economic conditions and that labor market conditions are particularly important determinants of remittance flows, explaining the unexpected jump in remittance flows in 2020-2021 and providing stronger predictive power when combined with income variables. Analysis of the micro data reinforces these findings, reflecting the existence of a family resource sharing model at play.

Keywords: Migrant remittances, covid-19 pandemic, global financial crisis, elasticities., remittance flow, micro data, labor market condition, IMF working papers, remittances to Central America and the Caribbean, migrant remittance, Remittances, Migration, Income, Labor markets, Central America, Caribbean, Global

JEL Classification: F22, F24, O54, E25, I20, J20

Suggested Citation

Bidawi, Hussein and Aliperti F. Domingues, Paola and Fratto, Chiara and Laframboise, N., The Propensity to Remit: Macro and Micro Factors Driving Remittances to Central America and the Caribbean. IMF Working Paper No. 2022/203, Available at SSRN: https://ssrn.com/abstract=4272236 or http://dx.doi.org/10.5089/9798400225093.001

Hussein Bidawi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Paola Aliperti F. Domingues

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Chiara Fratto

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

N. Laframboise

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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