I Trust, Therefore I Remit? An Examination of the Size and Motivation of Remittances

Abstract

AbstractThis study examines the size and motivation for remittances of returned migrants, based on the survey data taken in six countries (Bosnia-Herzegovina, Bulgaria, Georgia, Kyrgyz Republic, Romania and Tajikistan). In addition to the usual factors that are used in economic analysis to determine the size of remittances (i.e. income, marital status, family size, etc.) we use two additional ones, namely the use of remittances (material or human capital investment vs. consumption) and the identity of the decision-maker (migrant, spouse, parents, etc.). We find that remittances are higher when the decision-maker is the spouse or the migrant him/herself. Furthermore, remittances are higher when they are used for the education of children and adults; whereas they are lower when they are used for food and clothing or medical expenses. Given that the countries of origin cannot easily affect intra-family decisions, e.g. whether the spouse or children are left behind or who decides on how the money is spent, it seems difficult to draw concrete policy prescriptions. However, the findings about education expenses could lend some support for the provision of tax breaks or other benefits for migrants whose money is used for education purposes in the country of origin.Keywords: RemittancesRemittance UseMigrationTrustAltruismHousehold Decisions