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A dynamic double hurdle model for remittances: evidence from Germany

Giulia Bettin (), Riccardo (Jack) Lucchetti () and Claudia Pigini ()

Economic Modelling, 2018, vol. 73, issue C, 365-377

Abstract: In the last thirty years, migrant remittances have become a stable source of external finance for developing countries. In this paper, we investigate whether aggregate persistence can be traced back to individual remitting behaviour, as a result of migrants’ intertemporal choices. We propose a dynamic random-effects double hurdle model based on micro data from the German Socio-Economic Panel dataset. Our results show that there is significant state dependence in remitting behaviour, but in steady-state neither the probability to remit nor the transferred amounts are particularly large, thus suggesting that long-term intertemporal planning is rather sporadic. On these grounds, the medium-long term counterbalancing effect of remittances on the brain drain appears to be weak.

Keywords: Migration; Remittances; State dependence; Double hurdle; Intertemporal choices (search for similar items in EconPapers)
JEL-codes: F22 F24 C23 C34 C35 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ecmode:v:73:y:2018:i:c:p:365-377