Remittances and Income Smoothing

Catalina Amuedo-Dorantes and Susan Pozo

No 5568, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated.

Keywords: income smoothing; remittances (search for similar items in EconPapers)
JEL-codes: F22 O15 O54 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2011-03
New Economics Papers: this item is included in nep-ltv and nep-mig
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Citations: View citations in EconPapers (38)

Published - published in: American Economic Review, 2011, 101 (3), 582-587

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Journal Article: Remittances and Income Smoothing (2011)
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