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Endogeneity and sample selection in a model for remittances

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

No 361, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: We estimate a remittance model in which we address endogeneity and reverse causality relationships between 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 Maximum Likelihood (LIML). 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 very misleading if given a behavioural interpretation.

Keywords: migration; remittances; selection models (search for similar items in EconPapers)
JEL-codes: C21 C24 F22 F24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mig
Date: 2011-06
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Journal Article: Endogeneity and sample selection in a model for remittances (2012) Downloads
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