How does bargaining power affect remittances?

This paper examines the factors affecting the amount of remittances by migrants to their home countries, in a context of a family bargaining model. Spanish data does not show the same clear relationship between remittances and migrant income that is captured in the theoretical literature and certain empirical papers. Family bargaining models emerge as a useful framework within which to study remittances, and bargaining power is a key element in determining the level of such remittances. As a consequence of the consideration of bargaining power, the effect of income levels on remittances emerges as non-monotonic.

Research Highlights► The theoretical model shows that bargaining power plays a key role in the amount of remittances. ► Spanish data supports a negative link between the migrant's bargaining power and remittances. ► A non-monotonic link between migrant income and remittances is supported by theory and data.