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Remittances sent by a growing altruistic diaspora: How do they grow over time?

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Abstract: 

This paper investigates theoretically the time pattern of remittances sent home by a growing diaspora of emigrants who are motivated by altruism rather than pure self-interest. Migrants are assumed to care about the consumption of home-resident family members as well as their own welfare. Hence, remittance effort will depend upon the ratios of per capita income and income growth rates between the host country and the home country. Effort will depend also on the number of emigrants sending back remittances to each home-resident household. In general, the effect of remittances is to sustain growth of consumption per capita in the home country above the growth rate of per capita GDP. A priori, there is no necessary tendency for remittance effort to rise or fall over time. Falling remittance amounts per migrant may occur as the diaspora grows relative to the home population, but should not be treated as evidence of so-called ‘remittance fatigue’. A number of feasible scenarios are traced out, and some opportunities are identified to use statistical tests to adjudicate between self-interest and altruism as motives for sending remittances.
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Keywords: MIRAB; altruism; development; emigration; private transfer; remittance

Document Type: Research Article

Publication date: 01 April 2006

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