UNITED STATES: Personal Transfers in the U.S. International Accounts

Source details

Canonical URL: UNITED STATES: Personal Transfers in the U.S. International Accounts

U.S. personal transfer payments—current transfers in cash or in kind sent by the foreign-born population resident in the United States to households abroad—grew from $21.9 billion in 1999 to $50.9 billion in 2018.
BEA records personal transfers in the U.S. international transactions accounts; BEA’s estimates reflect transfers from the foreign-born population resident in the United States, including transfers sent through informal channels.
A portion of personal transfer activity falls within the scope of informal activities as defined by the IMF Task Force on Informal Economy (TFIE), which covers cross-border transactions and positions that arise from informal, underground, and/or illegal activities.

Definition of coverage:
- Current transfers in cash or in kind sent by the foreign-born population resident in the United States, regardless of legal status, to households abroad.
- Includes transfers sent through both formal and informal channels.
Definition of foreign-born population resident in the United States:
- Those who have resided, or intend to reside, in the United States for one year or more.
Channels:
- Formal channels include banks, credit unions, money transfer organizations (MTO) such as wire services, and postal services.
- Informal channels include hand-carried cash and courier services.

Estimation model inputs:
- Size of the foreign-born population.
- Income of the foreign-born population.
- Percentage of income remitted by the foreign-born population.
Data sources for model inputs:
- Annual source data for population size, demographic characteristics, and income: U.S. Census Bureau’s American Community Survey (ACS).
- Percentage of income remitted estimates: BEA estimates based on the Census Bureau’s 2008 migration supplement to the Current Population Survey (CPS), BEA research, and academic studies.
Demographic characteristics used in the model:
- Duration of stay in the United States.
- Family type (presence/absence of spouse; presence/absence of roommates).
- Country of origin.
Methodological notes:
- The percentage of income remitted varies by demographic characteristics, including country of birth.
- Model parameters are based on the 2008 migration supplement to the CPS.

Survey underreporting:
- Respondents may underestimate personal transfer values due to difficulty recalling every transfer sent during the previous year and lack of trust in confidentiality (Greico et. al, 2010).
- BEA’s methodology attempts to address likely underreporting.
Censoring and data limitations:
- Published CPS microdata censors reported personal transfers and income values to avoid disclosure.
- CPS reports income within categories rather than exact amounts and censors values above an upper income limit.
- BEA is exploring econometric methods to attenuate bias from censoring.
Model limitations:
- Small sample sizes in regressions for smaller remittance-receiving countries.
- Potential failure to fully capture changes in remittance behavior over time because model parameters derive from the 2008 CPS supplement.
Limitations of alternative source data (banks/MTOs):
- Bank and MTO data do not capture transfers through informal channels.
- Separate data for informal channels often do not exist or would require data sharing frameworks that do not currently exist.
- Difficulty distinguishing personal transfers from other transactions (business investments, real estate transactions, other financial transactions by private investors and diaspora members) in bank/MTO data.
- Difficulty distinguishing intermediate flows between countries from flows to final recipients if transfers pass through intermediate countries.

Obtaining accurate and timely source data for measuring personal transfers is challenging, compounded by a portion of activity falling within informal economic activities that are difficult to measure.
Main measurement challenges include:
- Correcting for underreporting on surveys.
- Addressing censoring within source data.
- Reliance on model parameters estimated from regressions based on the 2008 CPS supplement.
- Limitations of alternative source data such as banks and MTOs.
BEA continues to explore potential new source data and methods to improve estimates of personal transfers.