American Economic Review Vol. 101 No. 3 2011

Remittances and Income Smoothing

Catalina Amuedo-Dorantes¹; Susan Pozo²

¹ Department of Economics, San Diego State University, 5500 Campanile Drive, San Diego, CA 92182. · ² Department of Economics, Western Michigan University, 1903 West Michigan Avenue, Kalamazoo, MI 49008.

Abstract

Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated.

DOI

10.1257/aer.101.3.582

Volume

101

Issue

3

Pages

582-587

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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