Migrant Remittances: Mixed Motives and the Impact on Household Expenditures
Department of Agricultural and Applied Economics
Univeristy of Wisconsin-Madison
Wednesday, March 24, 2021
On-line via Zoom
12:00 pm-1:30 pm
The flow of remittance signals the economic connection between migrants and their households of origin, despite the physical separation. A huge collection of literature investigates why migrants remit and whether household expenditure is affected by the inflow of remittances. Migrants’ remittance sending behaviors can be driven by multiple factors. In addition to altruism and insurance that are explored in previous work, this study proposes a third possible motive: identity norm. I first develop a stylized theoretical framework that generates testable predictions on these three possible motives. Then, using a panel dataset pooled from three waves of the China Laborforce Dynamic Survey (CLDS), I find empirical evidence for migrants’ remittance sending under mixed motives. The second part of the empirical analysis examines the impact of migrant remittances on household expenditure. When the amount of migrant remittances is one percent higher, household total expenditure per capita increases by roughly five percent, which is driven mainly by consumptive expenses. Specifically, I observe an increase in several subcategories of household expenditure, including housing, medical care, education, commuting and gift sending, following the receipt of migrant remittances. These findings generally point to a welfare improvement for the migrant-sending households in rural China.