Do happiness and foreign aid affect bilateral migrant remittances?

Abstract

Purpose -Studies on the determinants of remittances focus primarily on a single country or undertake cross-country analyses using aggregate data. By comparison, there is a dearth of empirical evidence on the determinants of remittances from multiple host to multiple destination countries. To address this deficiency, the purpose of this paper is to use a novel dataset which captures these bilateral flows. Design/methodology/approach -The paper concentrates on three sets of explanatory variables: those which characterize the pair relationship, those that pertain to migrants' host country, and those related to the migrants' home country. Findings -Cultural and political factors play a fundamental role. Altruism is not key in migrant remittances; investment motives are more important. Bilateral aid inflows bear a direct relationship to remittances. The marginal effect of happiness (in migrants' host and home countries) on remittances is positive for a large percentage of countries in the sample. Practical implications -Results nullify the oft-asserted role of remittances in assisting with adverse economic conditions, such as inflation. They also identify a possible nexus between remittances and foreign aid -a link that heretofore has not been identified or discussed in the literature or recognized by policy-makers. Originality/value -The contribution of the paper is its use of bilateral data to present evidence on remittances capturing not only North-South, but also South-South flows. The paper also contributes to the literature by considering, for the first time, some additional variables as potential determinants of remittances, chief among them the level of happiness of migrants' host and home countries, as well as the level of aid disbursed to migrants' home country.

Reinventing Foreign Aid for Inclusive and Sustainable Development: Kuznets, Piketty and the Great Policy Reversal

“…According to the narrative, poor countries value development aspects like happiness more. This is broadly consistent with an evolving stream of the literature on happiness and wellbeing in the economics of development assistance (Arvin and Lew, , b, , , b).…”

Capital Utilization and Happiness of Labour Migrant Households, Thailand

“…It resulted in household members were not concern to much about household expenses, and it affected to happiness of the household. (Arvin, and Lew, 2002) 4.4 Level of investment from the remittance showed that households with different levels of investment from remittance would have significant difference toward capital utilization with statistically significant at the 0.01 level. Considering pairwise comparison, household that had high level of investment would have more capital utilization than household that had medium level of investmentt and household that had low level of investment.…”

Examining the cyclical pattern of remittance flow, migrants stock, and income of 31 pairs of countries with India

“…As discussed, the earlier inflow of remittance has serious implications on macroeconomic fluctuations in international trade, exchange rate, and overall economic growth that led to the rising/fall of immigration pattern (Corden and Neary, 1982;Rajan and Subramanian, 2005;Amuendo-Dorentas and Pozo, 2004;Lillo and Garay, 2019;Bettin et al, 2015;Arvin and Lew, 2012;Walmsley et al, 2007). Corden and Neary (1982) and Rajan and Subramanian (2005) argue that the prevalence of Dutch disease in the destination country leads to an appreciation of exchange rate and a lesser inflow of remittance to the origin country in the case of Latin American countries.…”