February 2014

IZA DP No. 7984: Do Migrants Send Remittances as a Way of Self-Insurance? Evidence from a Representative Immigrant Survey

published in: Oxford Economic Papers, 2016, 68 (1): 108-130. [Online First]

Do migrants send remittances as a way of obtaining insurance? While this motive is theoretically suggested in the literature, the question of identifying this relationship empirically has only begun to be explored. Using a unique representative survey of 1500 immigrants in the Greater Dublin Area, Ireland, we find a positive and significant relationship between risk aversion and remittance behavior. Risk-averse individuals are more likely to send remittances home and are, on average, likely to remit a higher amount, after controlling for a broad range of individual and group characteristics. Consistent with a "purchase of self-insurance" motive to remit, we also provide evidence of more remittances sent by risk averse immigrants facing higher wage risks and remitting to individuals with more financial resources.