The motivations of migrants to send remittances are explored by reviewing the literature and by looking at the specific cases of Albania and Moldova. While I am able to find “evidence” for some motivations, the aim to repay loans, self‐insurance in Moldova and altruism in both countries, the analysis resulted in inconclusive results, very much in line with the literature. It is not possible to give a satisfying answer to this question on a general level, as the migration context, e.g. type of migration flows, the causes of migration, the family setting and specific norms and
i values, influences whether and how much remittances are sent (see also Carl ng, 2008).
In Chapter 3 I extensively review the empirical and theoretical literature of the determinants of remittances. The remittances literature is defined by Lucas and Stark (1985), who argue that remitting motives can be classified either as “pure altruism”, “pure self‐interest” or something in between, “tempered altruism or enlightened self‐interest”. Indeed, a central motivation of a remitting migrant may be altruistic feelings towards the family left behind. An altruistic migrant reacts to poverty and shocks of the family by sending remittances. In this case, there is a positive relationship between adverse conditions of the receiving household and remittances sent. The second broad remitting motive discussed in the literature is self‐interest. Self‐ interested migrants may send remittances for a number of reasons: In order to inherit their parent’s wealth, as an investment (with family acting as a cheap and reliable financial agent) or to invest in housing, livestock, reputation etc. as a preparation for returning home.
The motivations in between self‐interest and altruism, are implicit contractual arrangements that benefit both the sender and receiver of remittances. The first contractual arrangement, an implicit co‐insurance contract between the migrant and family, is highlighted in the New Economics of Labor Migration theory (NELM). Remittances are sent home when the household experiences shocks and to enable the household to invest in new technologies. At the same time, the household also supports the migrant, e.g. during spells of unemployment.
Another type of contractual agreement between the household and family is loan repayment, for example, repaying human capital investment or the cost of migration. A final contractual arrangement is the exchange motive (Cox, 1987).
vague, implicit and interlinked nature of motivations to remit and the contradictory qualities of theory versus migrant behaviour makes the motives very difficult to measure. In Chapter 3 I also review the empirical literature of the determinants to remit. I show how different authors have tried to measure the different motives to remit by quantifying the effect of specific variables on the probability of remitting and on the amount of remittances sent. For example if remittances increase with wealth of the receiving household, the motive of the migrant is postulated to be the desire to inherit the household’s wealth. I compare the effects of these specific variables on remittances in different (country) studies. Two main conclusions can be drawn from this review: Firstly, as already stated, it is very difficult to measure “a motive”. The motives often overlap in practice and different migrant or household characteristics that affect remittances can be interpreted in many different ways and thus linked to different motives. Operationalisation of motives is highly problematic. Secondly, only few variables have the same effect in each study and these are mainly unsurprising revelations, for example a migrant having a higher income leads to more remittances. This means that the country and individual migrant context is still vital in explaining why people remit.
In Chapter 4 I attempt to apply some of the determinants of remittances theories to the cases of Albania and Moldova. Albania and Moldova differ in terms of migration and remitting patterns. Males are the majority of migrants in both countries and remittances are sent to all income groups. In Albania, higher amounts are sent to poorer households. Albanian men send higher amounts of remittances, probably due to cultural practice, while in Moldova there are no significant gender differences. In Moldova the more highly educated send more remittances implying that migration was an effective human capital investment in line with Sjaastad’s (1962) hypothesis.
To investigate the different theoretical motives to remit more closely, I applied three different econometric models, following the theoretical and empirical literature on the motivations to remit. In both countries, remitters have (some) altruistic motives. The better educated (and consequently wealthier) remit more. More remittances are sent to worse off households and migrants remit less if there are other migrants in the household, as the migrant is not the only one responsible for the wellbeing of the family. More remittances are sent to larger and thus needier households and to households living in communities with lack of employment prospects. The altruism evidence is especially strong for Albania. This is in agreement with the finding that Albanians migrate to support their families. In Moldova there is some evidence for self‐insurance. Migrants living in more risky environments (longer distance to destination, illegal entry, and higher unemployment rate in destination) send more remittances, a type of informal insurance premium. For some remittances seem to be paid as loan repayment in Moldova. However, all the above caveats also apply to these results and they should be taken with a grain of salt.
Testing the motivations to remit remains an intricate area of research with much room for improvement. I show that the current methodology employed in the
economic literature of testing several theories using multi‐purpose household surveys does not lead to strong and meaningful results. Further research should focus on finding more innovative ways of measuring motives, but most importantly move towards measuring specific determinants and combining quantitative research with qualitative data to get a better impression of the motives of remitters.
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