Remittances and the Brain Drain Revisited: The Microdata Show That More Educated Migrants Remit More

TLDR

Remittances and skilled migration have risen sharply, yet cross‑country regressions suggest that higher education may reduce remittance flows, sparking concern about future remittance growth. The study uses microdata from immigrant surveys in 11 major destination countries to reexamine how education influences remitting behavior. Results show that while education’s effect on the likelihood of remitting is mixed, it consistently raises the amount sent by those who remit, with higher migrant earnings largely driving this positive relationship and varying across destinations.

Abstract

Two of the most salient trends in migration and development over the last two decades are the large rise in remittances and in the flow of skilled migrants. However, recent literature based on cross-country regressions has claimed that more educated migrants remit less, leading to concerns that further increases in skilled migration will impede remittance growth. Microdata from surveys of immigrants in 11 major destination countries are used to revisit the relationship between education and remitting behavior. The data show a mixed pattern between education and the likelihood of remitting, and a strong positive relationship between education and amount remitted (intensive margin), conditional on remitting at all (extensive margin). Combining these intensive and extensive margins yields an overall positive effect of education on the amount remitted for the pooled sample, with heterogeneous results across destinations. The microdata allow investigation of why the more educated remit more, showing that the higher income earned by migrants, rather than family characteristics, explains much of the higher remittances.