Description

Using insights from the literature on shadow economies, and historical data on migration, remittances, and transaction costs, this paper empirically estimates the size of informal remittances for more than 100 developing countries. Results suggest that informal remittances amount to about 35-75 percent of official remittances to developing countries. Findings also suggest that the size of informal remittances varies by region: informal remittances to Eastern Europe and Sub-Saharan Africa are high, while those to East Asia and the Pacific are relatively low. With respect to the determinants of informal remittances, the paper finds that the stock of migrants abroad is the primary determinant, but that the level of money transfer fees also plays a role.