International migration, migrant stock, and remittances: Reexamining the motivations to remit

• Migrants’ motivations of remit are empirically examined.
• We find that existing migrants do not send more money when their home countries face negative income shock.
• More people migrate in response to such shocks.
• Observed increased remittance is the result of more migration (extensive margin).

This paper empirically examines the factors causing the recently increased flow of workers’ remittances to developing countries. The main question we seek to answer is whether these increased remittances are the result of increased amounts sent by existing migrants (intensive margin) or the result of more migration (extensive margin). Thus, this paper reexamines the hypotheses concerning motivations to remit. Using a large data set on migrant stock and remittances we show that home income contractions do not appear to induce existing migrants to send more remittances. Thus our results do not support the pure altruism hypothesis concerning workers’ remittances, according to which migrants send more remittances when their home country's relative income declines. However, our results indicate that the flow of remittances increases in response to income shocks at home which cause people to migrate to earn a higher income abroad.