A number of empirical studies examine the economic determinants of international remittances. These studies tend to focus on two key questions: first, since only about half of all migrants remit, what are the socio-economic factors that cause migrants to remit?; and second, once migrants decide to remit, what factors affect the amount of remittances that they send home? In general, these studies find that the propensity to remit is highest when migrants are married and in middle age, and that unskilled migrants tend to remit more than skilled migrants.

In perhaps the two broadest studies using data from a variety of developing countries, Adams (2008) and Faini (2007) examine how the skill level of international migrants (educated or uneducated) affects the level of remittances sent home by migrants. Using a variety of approaches, both authors find that skilled migrants (educated migrants) remit less than unskilled migrants. According to the authors, since skilled migrants are more likely to bring their families and to spend more time working abroad, they tend to remit less than unskilled migrants. Adams (2008) also finds that the level of poverty in a developing country has does not have any significant effect on the level of remittances sent home by migrants.

Using a large household survey from Mexico, Durand et al (1996) analyze the determinants of international remittances for Mexico-to-US migrants. The authors find that that the propensity to remit is highest when migrants are married, middle age (40s) and have used a coyote (smuggler) to migrate. They also find that the propensity to remit declines with increasing age and education. With respect to the amount remitted, the amount sent home is positively related to homeownership, education and income. For instance, with each additional year of schooling, the amount remitted increases by 4 percent.

In a similar study using survey data from Nicaragua, Naufal (2007) examines the remittance behavior of international migrants in two destination countries: the US and Costa Rica. Results suggest that male migrants are less likely to remit and that migrants who are working and living in the US are more likely to remit. Migrants are also more likely to remit if they are the spouse or the parent of the household head back home. The author also examines how the propensity to remit varies for migrants from the same household. He finds that migrants from the same household compete, that is, if one migrant remits then the second migrant from that household will tend to remit more.

In a more theoretical study, de la Briere et al (2002) use household survey data from the Dominican Republic to test between two motivations to remit: insurance, whereby migrants remit on the basis of an insurance contract with their parents; and investment, whereby migrants remit on the basis of potential bequests from their families. The authors find that the importance of these two motivations to remit varies by destination (internal vs. international migration) and gender. The insurance motive is mainly fulfilled by female international migrants to the US. Female migrants to the US send more remittances when their parents are ill, while male migrants to the US do not do this unless they are the sole migrant from the household.

Publication Details

Topic 8 – Economic Determinants of Remittances
Social Science Research Council
Publish Date
March 2009
0, Topic 8 – Economic Determinants of Remittances (Social Science Research Council, March 2009).