Why Do they Remit? Examining Factors Influencing Migrant Remittances in India

Abstract

Little is known about the factors that determine the remittance behaviour of migrants in India. With socioeconomic transformations, the gradual change in female migration patterns for economic reasons also signifies their contribution to household well-being. Using the National Sample Survey (2007-2008) data and applying the Heckman's two-stage procedure, this paper examines, separately, key determinants that influence the remittance behaviour of male and female migrants. Empirical estimates reveal that among various factors, monthly per capita expenditure, distance from origin, and duration of stay at destination are important predictors of remittance behaviour. These determinants of remittance highlight that migrants retain strong economic links with origin families not only to provide economic support but also for social ties. The findings provide support of contractual motive of remitting and suggest remittances are more effective in promoting development. Further, gender differences in remittance behaviour are observed for household size, occupational and educational level of the migrant.

Why Do Migrants Remit? Empirical Evidence from Kenya

“…Another key finding is that endowment differences (associated with household head status, labour market earnings and age differences) are more significant than treatment differences in explaining the entire gender difference in remittances. In India, Mahapatro [31] finds a positive and significant relationship between household income and levels of remittances sent by both genders, suggesting migrants behave contractually. The study also finds gender differences in migrant's remittance behaviour.…”

“…These studies overlook data censoring problem of the dependent variable (remittances) and thus, may lead to biased and inconsistent estimates of the determinants of remittances if scale of censorship (zero remittance observations) is significant [29]. The censored nature of the dependent variable (remittances) is due to the fact that some migrants do not send any remittances in a given year [30,31].…”

“…Heckman sample selection approach is used by several previous studies [10,16,43,44,45,46,31] to investigate the drivers of remittances. For instance, Hoddinott [16] finds that remittances to Central Kenya from migrant sons increase with parental landholdings while inheritable land assets have a stronger effect if a household has multiple migrant sons.…”

“…Several empirical studies use gendered approach to analyze the determinants of remittances [58,30,31]. VanWey [58] use data from Nang Rong Thailand to scrutinize motivations to remit and finds that women have a higher probability to remit than men.…”

“…Whilst empirical works of VanWey [58], Niimi and Reilly [30] and Mahapatro [31] emphasize how the determinants of remittances are influenced by gender, their analyses have shortcomings. VanWey [58], for instance, analyze the probability to remit and not levels of remittances.…”