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Endogeneity and sample selection in a model for remittances

Giulia Bettin (), Riccardo (Jack) Lucchetti () and Alberto Zazzaro ()

Journal of Development Economics, 2012, vol. 99, issue 2, 370-384

Abstract: We estimate a remittance model in which we address endogeneity and reverse causality relationships between immigrants' remittances, pre-transfer income and consumption. In order to take into account the fact that a large share of individuals do not remit, instrumental variable variants of the double-hurdle and Heckit selection models are proposed and estimated by Limited Information ML; semiparametric extensions are considered as robustness checks. Our results for a sample of recent immigrants to Australia show that endogeneity is substantial and that estimates obtained by the methods previously employed in the literature may be misleading if given a behavioral interpretation.

Keywords: Remittances; Migration; Selection models (search for similar items in EconPapers)
JEL-codes: F24 F22 C21 C24 (search for similar items in EconPapers)
Date: 2012
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