The Propensity to Remit: Macro and Micro Factors Driving Remittances to Central America and the Caribbean
IMF Working Papers, September 30, 2022
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- The Propensity to Remit: Macro and Micro Factors Driving Remittances to Central America and the Caribbean
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Bibliographic details
- Authors: Hussein Bidawi, Paola Aliperti F. Domingues, Chiara Fratto, Nicole Laframboise
- Published: September 30, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400221873.001
Summary
- Study revisits key macro indicators driving remittances to Central America and the Caribbean (CAC).
- Compares heterogeneous impacts of the global financial crisis (GFC) and COVID shocks.
- Uses micro data from the U.S. Current Population Census to examine individual features of immigrant households and effects on the “propensity to remit”.
- Finds remittance flows are responsive to both sending and receiving country economic conditions.
- Finds labor market conditions are particularly important determinants of remittance flows, explaining the unexpected jump in remittance flows in 2020-2021 and providing stronger predictive power when combined with income variables.
- Micro-data analysis reinforces macro findings and reflects the existence of a family resource sharing model.
Key Findings and Evidence
- Remittances to CAC surprised positively during 2020 and 2021.
- Labor market conditions (sending-country and receiving-country) are particularly important determinants of remittance flows.
- Combining labor market indicators with income variables yields stronger predictive power for remittance flows.
- Micro evidence from U.S. Current Population Census supports a family resource sharing model influencing propensity to remit.
Methodology and Data
- Macro analysis revisits key indicators historically associated with remittances and contrasts responses during the GFC and COVID shocks.
- Micro analysis leverages individual and household features from the U.S. Current Population Census to assess determinants of individual propensity to remit.
Subject Areas and Keywords
- Subject: Balance of payments, Education, Income, Labor, Labor markets, Migration, National accounts, Population and demographics, Remittances
- Keywords: Caribbean, Central America, covid-19 pandemic, elasticities., Global, global financial crisis, IMF working papers, Income, labor market condition, Labor markets, micro data, migrant remittance, Migrant remittances, Migration, remittance flow, Remittances, remittances to Central America and the Caribbean
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- Working Paper