Remittances in Georgia: Correlates, Economic Impact, and Social Capital Formation

Theodore Gerber () and Karine Torosyan
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Theodore Gerber: University of Wisconsin-Madison

No 002-10, Working Papers from International School of Economics at TSU, Tbilisi, Republic of Georgia

Abstract: Using a new data source, the Georgia on the Move Survey, we examine migrantlevel, household-level, and contextual variables associated with the probability that a Georgian household receives remittances. We use propensity score matching to estimate how remittances affect particular types of household expenditures, savings, labor supply, health, and other measures of well being more precisely than is usually possible. By conducting separate analyses for the subsample of households who currently have a migrant abroad, we are able to distinguish the effects of remittances from the effects of migration as such. In Georgia remittances improve household economic well-being without, for the most part, producing the negative consequences often suggested in the literature. The impact of remittances is especially pronounced in urban settings, less so in rural areas. We also find evidence for an aspect of remittances that has not been previously identified: they foster the formation of social capital because they increase the amount of money that households give as gifts to other households.

Pages: 34 pages
Date: 2010-07
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