2021/12 | LEM Working Paper Series | ||||||||||||||||
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Exploring the Macroeconomic Drivers of International Bilateral-Remittance Flows: A Gravity-Model Approach |
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Giorgio Fagiolo and Tommaso Rughi |
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Keywords | |||||||||||||||||
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International remittances; International migration; Gravity Models.
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JEL Classifications | |||||||||||||||||
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F24, F22, F63
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Abstract | |||||||||||||||||
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This paper investigates the macroeconomic determinants of global bilateral remittances flows.
Using data covering 216 World countries over the 2010-2017 period, we employ a gravity-model
approach to explore the role payed by dyadic and country-specific covariates in explaining
remittances. Robustly across alternative estimation techniques and specifications, we find
that remittance flows are strongly impacted by size effects (i.e., number of migrants in the
host country and population at home); transaction costs; common social, political and cultural
ties; output growth rate and financial development in the home country. We also document the
existence of a robust non-linear relationship between per-capita income at home and remittance
flows, which we study both in the aggregate and in subsamples where home and host countries
are categorized according to their income group. Overall, our results suggest that altruistic
and self-interested motives non-trivially interact and may change across both host/home income
groups and the level of income at home.
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