Remittances and Subjective Welfare in a Mixed-Motives Model: Evidence from Fiji

Richard P.C. Brown and Eliana V. Jimenez
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Eliana V. Jimenez: School of Economics, The University of Queensland, https://economics.uq.edu.au

No 370, Discussion Papers Series from University of Queensland, School of Economics

Abstract: To analyze migrants' remittance motivations we extend the mixed-motives model of private transfers developed by Cox et al (2004), incorporating subjectively-assessed recipient welfare. We test the model with customized survey data from Fiji, finding evidence supportive of altruism for households below a subjective threshold level, indicating that international migrants� remittances provide important social protection coverage to households where formal social protection systems are lacking.Unlike previous studies, we also find a positive, exchange-motivated relationship for those above the threshold. The conventional linear model applied to the same sample uncovers neither relationship. We conclude that either crowding-out or crowding-in of remittances can occur when recipients� welfare improves, depending on the household�s pre-transfer welfare level. The net effects of recipients� welfare improvements on remittances, and the effects of remittances on poverty alleviation and income distribution, are consequently more complex and ambiguous than previous studies suggest.

Date: 2008
New Economics Papers: this item is included in nep-dev, nep-hap and nep-mig
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:370

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