Lecture 9: Remittances

1
Lecture 9 Remittances

• Are remittances a substitute for Canadian Aid?

2
Motivations

• Altruism One way
• For how long and to whom?
• Implicit Contract
• For how long and to whom?
• Combination of both
• Does motivation differ by Immigration Status?
• Temporary vs. Permanent

3
Canadian Case

• Why so little
• Less than 6 of total HH expenditures
• Less than 1/3 of foreign-born remit
• Largest remittances by older vintage of
  immigrants
• What do remittances look like over life cycle?
• What is split between household and charitable
  remittances?

4
Distribution of Remittances
5
Table 3 Expenditure Elasticities for Remittances
to Persons Calculated from LA/AIDS, 1992/1996
Population Uncontrolled Uncontrolled Uncontrolled Controlled Controlled Controlled
Group Income Group Income Group Income Group Income Group Income Group Income Group
all top Y/2 bottom Y/2 all top Y/2 bottom Y/2
Unrestricted Canadian 1.07 1.27 1.19 1.88 1.73 1.83
Unrestricted N.Am.W.Eu. 1.29 1.43 1.67 2.28 2.14 2.23
Unrestricted SE European 1.01 1.11 1.09 2.07 1.59 2.29
Unrestricted Ch.,As.Oc. 1.09 1.12 1.09 1.10 1.13 1.09
Restricted for Homogeneity and Symmetry Canadian 1.09 1.25 1.20 1.86 1.70 1.78
Restricted for Homogeneity and Symmetry N.Am.W.Eu. 1.29 1.43 1.66 2.25 2.10 2.18
Restricted for Homogeneity and Symmetry SE European 0.98 1.06 1.08 2.08 1.60 2.36
Restricted for Homogeneity and Symmetry Ch.,As.Oc. 1.09 1.12 1.10 1.10 1.13 1.09
Notes Elasticity is computed through the formula
, where
is the actual mean expenditure share and
is the estimated household income coefficient.
6
Household Transfers
7
Charitable Remittances
8
What is done with remittances?

• Household consumption
• Who gets poorest or middle class
• Is it invested schooling, capital equipment
• Two for One Mexico Programme
• Mexican heroes to Mexican exploited
• Are remittances a substitute for aid or FDI?

9
Debate

• If Canada wants to aid development it should
  remove current immigration policy of selecting
  the highly skilled and allow 250,000 unskilled
  immigrants to enter yearly.