August 2007

IZA DP No. 2966: Determinants of Savings and Remittances: Empirical Evidence from Immigrants to Germany

published in: Review of Economics of the Household, 2011, 9 (1), 45-67

This paper investigates the determinants of migrants' financial transfers to their home country using German data. A double-hurdle model is applied to analyze the determinants of the propensity to send transfers abroad and the amount of transfers. The findings reveal that return intentions positively affect financial transfers of immigrants to their home country. Moreover, while the effect of the household size on migrants' transfers abroad turns out to be significantly negative, remittances are higher if close relatives live in the sending country. Finally, Vuong-tests indicate that the double-hurdle model is the correct specification for the analysis of migrants' savings and remittances rather than the conventional Tobit model usually applied in the literature.

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