Remittance Receipt and Business Ownership in the Dominican Republic

18 Pages Posted: 5 Jul 2006

See all articles by Catalina Amuedo-Dorantes

Catalina Amuedo-Dorantes

San Diego State University - Department of Economics; IZA Institute of Labor Economics

Susan Pozo

Western Michigan University - Department of Economics

Abstract

Using household-level data from the Dominican communities in the Latin American Migration Project (LAMP-DR7), we examine the links between remittance receipt and business ownership. We find that while the existence of a family business attracts remittance inflows, these monetary funds are associated with a reduced likelihood of business entrepreneurship. These results are consistent with various hypotheses regarding remittances and business investments. First, remittances may be motivated by the availability of investment opportunities in the home community. Second, remittances may respond to a bequest motive on the part of the emigrant, who may wish to lay claim on family assets when returning home. Lastly, remittances may cause an income effect that reduces family labour force participation and, correspondingly, the likelihood of family-run business investments.

Suggested Citation

Amuedo-Dorantes, Catalina and Pozo, Susan, Remittance Receipt and Business Ownership in the Dominican Republic. The World Economy, Vol. 29, No. 7, pp. 939-956, July 2006. Available at SSRN: https://ssrn.com/abstract=914267 or http://dx.doi.org/10.1111/j.1467-9701.2006.00830.x

Catalina Amuedo-Dorantes (Contact Author)

San Diego State University - Department of Economics ( email )

5500 Campanile Drive
San Diego, CA 92182
United States
619-594-1663 (Phone)
619-594-5062 (Fax)

IZA Institute of Labor Economics

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

Susan Pozo

Western Michigan University - Department of Economics ( email )

1903 West Michigan Avenue
Kalamazoo, MI 49008
United States
269-387-5553 (Phone)
269-387-5637 (Fax)

HOME PAGE: http://homepages.wmich.edu/~pozo/

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