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Remittances of foreign workers in Italy: an estimation of invisible flows in the "informal channel"

Giacomo Oddo (), Maurizio Magnani (), Riccardo Settimo () and Simonetta Zappa ()
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Maurizio Magnani: Banca d'Italia
Riccardo Settimo: Banca d'Italia
Simonetta Zappa: Banca d'Italia

No 332, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper examines the determinants of outgoing remittances from Italy and presents a methodology for quantifying the share of remittances not sent via official intermediaries (money transfer operators, banks, post offices) but transferred through informal channels and hence not measured and not included in official data. The existence of invisible flows can be inferred from the positive and statistically significant empirical relation between distance of the recipient country and average per capita remittance, after controlling for all other relevant explanatory variables. Such a relation should be null or non-significant if flows were observed in their entirety. Exploiting this empirical relation and relying on the detailed geographical breakdown of the data collected by the Bank of Italy, our proposed methodology estimates the informal channel to account for between 10 and 30 per cent of total outflows, mostly directed to countries closer to Italy. Our analysis shows a reduction in the share of informal remittances on total outflows: over the ten-year observation period it has shrunk by about 20 per cent.

Keywords: remittances; immigration; balance of payments (search for similar items in EconPapers)
JEL-codes: F22 F24 O15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-iue, nep-mig and nep-pay
Date: 2016-06
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_332_16

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