An Integrated Analysis of Migration and Remittances: Modeling Migration as a Mechanism for Selection

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Abstract:

Prior work models individuals’ migration and remittance behavior separately, and finds mixed empirical support for altruistic or contractual theories of remittances. This inconsistency may result from selection bias. This study controls for this bias statistically, and treats migration as a mechanism for selection in a censored probit model of remittances. Using longitudinal and multi-level data from Thai internal migration, the study reports three findings: First, altruism and insurance seeking influence both migration and remittance probability. Second, bargaining, inheritance seeking and investment opportunities decrease probability of migrating, but increase probability of remitting. Third, these results are considerably different than those obtained by conventional approach of modeling remittances separately. The study concludes that migration and remittances are related processes, and it is crucial for an analysis of remittances to control for the selectivity of migration.

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