The Economics of Migrants' Remittances

82 Pages Posted: 21 Mar 2005

See all articles by Hillel Rapoport

Hillel Rapoport

Bar-Ilan University - Department of Economics; Stanford University

Frédéric Docquier

Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

Date Written: March 2005

Abstract

This chapter reviews the recent theoretical and empirical economic literature on migrants' remittances. It is divided between a microeconomic section on the determinants of remittances and a macroeconomic section on their growth effects. At the micro level we first present in a fully harmonized framework the various motivations to remit described so far in the literature. We show that models based on different motives share many common predictions, making it difficult to implement truly discriminative tests in the absence of sufficiently detailed data on migrants and receiving households' characteristics and on the timing of remittances. The results from selected empirical studies show that a mixture of individualistic and familial motives explains the likelihood and size of remittances. At the macro level we first briefly review the standard (Keynesian) and the trade-theoretic literature on the short-run impact of remittances. We then use an endogenous growth framework to describe the growth potential of remittances and present the evidence for different growth channels. We then explore the relationship between remittances and inequality. This relationship appears to be non-monotonic. This is consistent with different theoretical arguments regarding the role of migration networks and/or the dynamics of wealth transmission between successive generations.

Keywords: remittances, migration, income distribution, private transfer

JEL Classification: J61, D31, O15

Suggested Citation

Rapoport, Hillel and Docquier, Frédéric, The Economics of Migrants' Remittances (March 2005). IZA Discussion Paper No. 1531. Available at SSRN: https://ssrn.com/abstract=690144

Hillel Rapoport (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 535 3180 (Fax)

Stanford University ( email )

Stanford, CA 94305
United States

Frédéric Docquier

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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