3

Workers Remittances and the Real Exchange Rate: A Quantitative Framework
Author(s): Riccardo Faini

Source: Journal of Population Economics, Vol. 7, No. 2 (Jun., 1994), pp. 235-245
Published by: Springer
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journal 01
J Popul Econ (1994) 7:235-245
Population
Economics
? Springer-Verlag 1994
Workers remittances and the real exchange rate

A quantitative framework
Riccardo Faini
University of Brescia, IGIER and CEPR, Faculty of Economics, Via Fratelli Porcellaga 21,
1-25121 Brescia, Italy
Received March 29, 1993 / Accepted November 10, 1993
Abstract. Workers' remittances represent a sizeable component of international

trade flows in goods and services. The paper tries to assess to what extent workers
remittances are responsive to key macroeconomic variables. We first develop a
simple model of altruistic transfers and show that the real exchange rate may play
a crucial role in affecting the remittance behaviour of migrants. Econometric
estimation of a remittance equation for a sample of five Mediterranean countries
indicates that the real exchange rate is indeed a significant determinant of remit?
tances. Further support in this respect comes from an analysis of remittance
behaviour by foreign workers in Germany. We also find strong evidence to sup?
port the claim that remittances are altruistically motivated, as indicated by the
systematically negative coefficient associated with recipients' income.
1. Introduction
Workers' remittances represent a sizeable component of international trade flows

in goods and services. In 1988, workers' remittances were equal to $ 65 billion, ac?
counting for almost eight per cent of worldwide trade in services (Stanton Russell
and Teitelbaum 1992). For developing countries, in particular, the importance of
remittances is often substantial. This is typically the case when such countries
have been at the origin of large scale migrations. For Maghreb countries, for in?
stance, workers remittances totalled $ 2.3 billion in 1988. In Morocco alone, they
reached $ 1.45 billion, accounting for 44% of merchandise exports and con?
tributing more than phosphates to total foreign exchange earnings. More com?
prehensive evidence on the contribution of workers remittances is presented in
Table 1 for a selected sample of developing countries.
I am grateful to Luigi Guiso, Oded Stark for helpful discussions, to Werner Smolny and two
anonymous referees for stimulating comments and to Fabrizio Perri and Fabiano Schivardi for superb
research assistance. The responsibility for any remaining errors is mine.
236 R. Faini
Table 1. Export share
1980 1989
Morocco 54 44
Tunisia 15 18
Algeria 3 4
Egypt 70 94
Jordan 138 56
India 28 23
Pakistan 90 39
Bangladesh 50 59
Philippines 5 10
Burkina Faso 95 69
Mali 23 34
Benin 57 17
Mexico 2 10
Jamaica 10 21
Source: Stanton Russell an
The macroeconomic r
their responsiveness t
suggest indeed that
macroeconomic indica
Recall that the debt cris
nal credit, forced man
measures in an effort
scarce foreign exchan
ticularly in the conte
essential step both to
tural shift of resource
the financial sector, in
interest rates, represe
policies were quite like
remittances. Perhaps s
justment policies focuss
the flow or remittanc
The purpose of this p
rate policies on remit
that a real exchange r
value of remittances, in
age of foreign exchan
transfers and show that
depreciation may be l
The paper is organise
model of remittances.
affecting the steady s
some estimates of the
Mediterranean countr
tance behaviour of for
conclude the paper.
Workers remittances 237
2. Remittances and the real exchange rate
a) Models of remittances
Even a cursory reading of the literature suggests that we can distinguish at least
three main approaches to the modelling of workers' remittances. In the first one,
remittances are viewed as a part of a contractual arrangement between the family
and the migrant. The latter transfers income in cash or kind to his family for
several different not necessarily mutually exclusive motives: the aspiration to in?
herit, the need to ensure that his assets at home are properly taken care of and
the desire to enhance his family relationships so as to be able to return home with
dignity (Lucas and Stark 1985). Alternatively, altruistic considerations may be
predominant in the decision to remit. The migrant's welfare, in this latter set-up,
is positively related to both his own and his family's consumption levels. In choos?
ing the optimal level of remittances the migrant will try to equalize the marginal
utility of the recipients' and his own consumption1. Attempts to discriminate be?
tween these two hypotheses emphasize their differing implications. In the
altruistic model, a decline in recipients income should be associated with a larger
flow of remittances to the extent that the migrant seeks to offset the impact of
falling income on his family's consumption. In the exchange-related model, on
the contrary, an increase in the income of those leftbehind should either increase
the marginal benefit to the migrant from remitting (because, say, of a larger
potential inheritance) and prompt therefore an increase in remittances, or have no
effect at all. Finally, in both the exchange-related and the altruistic models, the
migrant's income level in the host country should positively affect the level of
remittances. The need to distinguish between these two hypotheses is underscored
by their differing policy implications: in the altruistic model, a public transfer
scheme designed for instance to favour the poor would elicit an offsetting decline
in private transfers, leaving the situation of the poor virtually unchanged. No
such effect would arise in the exchange-related framework (Cox 1987). The em?
pirical evidence on these issues for developing countries is mixed. Some studies
(Lucas and Stark 1985, for Botswana; Ravaillon and Dearden 1988, for urban
households in Java) find a positive association between recipient income and
remittances. Others (Ravaillon and Dearden 1988, for rural households in Java;
Cox and Jimenez 1992, for the Philippines) come to the opposite conclusion.
Both the altruistic and the exchange-related models emphasize microeconomic
and real considerations. The third approach focusses instead mostly on financial
and macroeconomic factors (Katseli and Glytsos 1986). In this set-up, remittances
are modelled as a portfolio allocation choice, where the migrant decides how large
a share of his wealth should be remitted to his home country to be invested there.
Factors affecting the remittance decision include therefore the level of interest
rates at home and abroad, the expectations about future exchange rate movements
and the degree of the migrant's risk aversion. Under the assumption that the
migrant maximizes the total return of his portfolio expressed in home currency
1 One extreme version of the altruistic model is the so-called "remittance maximization" approach
(Bhattacharyya 1985), where migrants are assumed to send a maximum of remittances back to their
family. Clearly enough, in this set-up, the level of family income should not play any role in the remit?
tance choice. The amount of remittances would depend almost exclusively on the emigrants own in?
come in the host country.
238 R. Faini
units and that the interest rate abroad is larger than at home after correcting for
expected devaluation, Katseli and Glytsos (1986) show that the migrant will trade
off a larger portfolio share in foreign currency with a greater risk. Notice that,
in this set-up, an increase in the foreign interest rate has a priori an ambiguous
impact on remittances: on the one hand, it improves the return on foreign-curren?
cy denominated investment and thus discourages remittances, on the other it in?
creases the level of wealth with a positive impact on remittances. The empirical
evidence on the portfolio approach is mixed. Katseli and Glytsos (1986) find that
an increase in foreign interest rates leads to larger remittances flows, but fail to
identify a significant impact of either domestic interest rates or of anticipated
depreciation. On a even more negative note, Swamy (1981) and Straubhaar (1986)
conclude that financial factors have little if no explanatory power for the
behaviour of remittances. The more recent evidence by Elbadawi and Rocha
(1992) points instead to a significant impact of both the exchange rate premium
and the inflation level in the home country.
b) The role of the real exchange rate
A conspicuous omission from the previous literature relates to the impact of the
real exchange rate. Exchange rate considerations only play a role in the portfolio
approach to the extent that the expectation of a currency devaluation may
discourage remittances. Yet, as simple intuition would suggest, the level of the real
exchange rate should also significantly affect the behaviour of remittances. This
is best seen in the context of either the altruistic or the exchange-related models.
Suppose that the migrant's income is given in terms of the host country's good.
Suppose also that recipient (migrant's) consumption falls exclusively on the home
(host) country good. In the altruistic model, a real exchange depreciation will af?
fect remittances through two main channels. First, for a given consumption by the
migrant of the host country good, it will permit a larger consumption of the home
good by the migrant's family. In other words, provided that remittances are
positive to begin with, a real depreciation will have a positive income effect. Sec?
ond, it will lead to a larger demand for the home country good through standard
substitution effects. The impact on remittances depend on whether they are ex?
pressed in terms of the home or the host country good. In the former case, both
income and substitution effects work in the same direction of a larger consump?
tion of the home good. The impact of remittances of a real depreciation is
therefore unambiguously positive. In the latter case, the substitution effect should
be associated with larger remittances, whereas the income effect would work in
the opposite direction. The implications of this result are considerable. By
engineering a real depreciation, a country may find that real remittances (in terms
of the host country good) would decline (provided that the income effect
dominates), thereby aggravating the current account situation.
To better assess the relevance of these considerations, we rely on the following
simple model. Suppose that the migrant's utility is a function of both his own and
his family's consumption. We assume that instantaneous utility can be described
by a CES function, i.e.:
u(cm,cf) = [(i-?)c-o+?c/orl/?. d)
The representative migrant maximises the value of (1) subject to the following
constraint:
Cf= Yf+XR= Yf+Rf (2)

Cm = Ym-R , (3)
where C, R and Y indicate consumption, remittances (in terms of the host country
good) and income respectively, the subscripts m and / refer to the migrant and
his family respectively, while A denotes the real exchange rate (defined so that an
increase in the index corresponds to a real depreciation). Also Rf=XR repre?
sents remittances in terms of the home country good. After substituting (2) and
(3) in (1), taking derivatives with respect to R and solving the first-order condition
for the optimal value of remittances, we find that:
R=Y1 -aYf
+ aX
, (4)
where
f?]
and where o is the elasticity of substitution2.
Some features of this model are worth noticing. First, it is easily seen that
remittances depend on the level of the real exchange rate. The direction of the ef?
fect of a real exchange variation on R is however ambiguous. Consider the case
where o - 0. Then:
Y ?Y
R
1+X
= m f (6)
and a real depreciation (i.e. an increase in A) will lead to lower remittances. The
explanation is simple. Following our earlier discussion, if a is close to zero,
substitution effects are weak and will be dominated by the (negative) income ef?
fect of a real depreciation. Correspondingly, for larger values of the elasticity of
substitution (for instance for a = 1), a real depreciation will lead to larger remit?
tances. Second, both the value of remittances and the impact of the real exchange
rate on remittances will depend on the value of ?. From (4), we see that an in?
crease in ? will unambiguously be associated with higher remittances. The impact
2 Notice that, in the context of an exchange-related transfer, remittances rather than family's con?
sumption should appear directly as an argument in the utility function, as presumably the migrant's
utility would depend also on the set of services he or she can acquire from his or her family through
remittances. The implication here is that family's income should no longer be a significant determi?
nant of remittances. As mentioned earlier, though, if the benefits to a migrant from remittances de?
pend on his family's income (as it would be case for instance when aspiring to inherit), then family's
income would have a positive rather than a negative impact on remittances. Finally, in the remittance
maximization approach, neither family income nor the real exchange rate should affect the amount
of remittances.
240 R. Faini
of ? on the real exchange rate responsiveness of remittances is harder to assess.

Suppose, though, that substitution effects are weak, i.e. that g = 0. An increase
in ? would then result in remittances being more responsive to variations in the
real exchange rate. The intuition is simple. If ? is large, then family's consump?
tion, as a share of total income, is also large and so are remittances. Real exchange
variations have therefore a stronger income effect compared to the case where ?
is relatively smaller. But stronger income effects mean that, in the absence of
substitution effects, a real depreciation will lead to a more pronounced fall in
remittances. Correspondingly, if substitution effects dominate, a larger value of
? would imply a smaller (positive) impact of real exchange rate variations on
remittances. A further relevant implication of our approach is that an equi-pro
portionate increase in both the migrant's and recipients income will lead to an
equivalent percentage increase in remittances. This result is strictly dependent on
our assumption of homothetic preferences in (1). It would be possible to modify
this set-up to allow for a more general pattern of elasticities of remittances with
respect to the migrant's and the family's income. Suppose for instance that the
parameter ? is not fixed but depends on recipient income:
^-? = A(yfy, (7)

where A is a constant and y is a parameter. A negative value of y would indicate
that the degree of altruism is a declining function of the family's income level.
A positive value of y would instead suggest that selfish considerations are
predominant. The homotheticity hypothesis as well as the more general pattern
embedded in (7) can be easily tested empirically.
c) Empirical analysis
Ideally, the previous model should be applied to microeconomic data. Besides the
problem of data availability, one would have to contend with one major difficulty,
namely the absence of sufficient real exchange variation for a cross-section of in?
dividuals at a given point of time. Longitudinal data would provide the obvious
solution, but are seldom available over an adequately long period of time. In what
follows, we take the simple route of relying on aggregate time-series information.
This comes at the cost of not being able to control for crucial individual charac?
teristics (such as education, sex, other demographic indicators) which are known
to affect remittances (Lucas and Stark 1985).
For the purpose of econometric analysis, we rely on a log-linearization of (4),
after allowing for the possibility that the remittances elasticities with respect to
migrant's income and family's income may not sum to one. We apply the resulting
equation to the real value of aggregate remittances to Morocco, Portugal, Tunisia,
Turkey and Yugoslavia from 1977 to 1989. The choice of countries is dictated
mainly by the availability of data, in particular on the number of migrants
abroad. Recall that (4) describes the remittance choice of an individual migrant.
The aggregate amount of remittances will then depend also on the total stock of
migrants abroad. We expect this variable to enter the equation with a unitary coef?
ficient. We also include in the set of explanatory variables the domestic and the
foreign nominal interest rates on comparable maturity deposits as well as the ex
pected nominal depreciation to capture some of the factors highlighted in our pre?
vious discussion. The expected nominal depreciation is generated by a regression
which includes on the right-hand side the lagged values of foreign exchange
reserves, of the current account balance and of the inflation differential between
the home and the host country. In all cases, host countries values are computed
as weighted average of the host countries relevant variables with weights reflecting
the relative importance of the host country as a destination of migrations. The
estimating equation is:
\nRf(t) = a0 + ailnSMlG + a2\n Ym + a3 In Yf+aA\nX

+ a5(rm-rf-?) + a6lnRf(t-l) , (8)
where Rf denotes real remittances in terms of the home country good, SMIG is
the existing stock of migrants, Ym and ^represent the migrant and the family's
income respectively, A is the real exchange rate, rm and Ay indicate the nominal in?
terest rate in the host and the home country, while ? is the expected nominal
devaluation. Following our earlier discussion, we expect ax, a2, a4 and a5 to be
positive and a3 to be negative. Homothetic behaviour would also imply that the
sum of the long-run coefficients on Ym and Yf be equal to one, i.e. that
a2 + a3 = l-a6. With homotheticity, given that a3<0, the long-run elasticity of
remittances with respect to Ym, i.e. a2/(l-a6), should then be greater than one.
Our econometric strategy is the following. Because of the short time-span
covered by each country, we are forced to resort to some form of pooling. To allow
for the possibility of common shocks to remittance behaviour (because say of
changing conditions in receiving countries), we rely on a seemingly unrelated
regressions framework (SURE), but impose that all slope coefficients be the same
in the five countries equations. Only the intercept is allowed to differ across coun?
tries. We first test the hypothesis that the long-run coefficient on the stock of
migrants is equal to one. The restriction is not rejected at very comfortable
significance levels. We then test the restriction that the elasticities of remittances
with respect to the host and the home countries income sum to one. Also this
restriction is not rejected. We present, however, both the constrained and the un?
constrained estimates in the belief that the unconstrained coefficients on Ym and
Yf may be of some interest on their own. All equations are estimated by SURE.
As a diagnostic tool, we rely on the Lagrange Multiplier test for serial correlation
in a multivariate system (Breush and Godfrey 1981).
Econometric results are presented in Table 2. As a measure of the stock of
migrants (SMIG), we use the stock of workers abroad3. In column 1, we do not
impose the homotheticity constraint that a2 + a3 = l-a6, while in column 2 the
restriction is imposed4. The dependent variable is the real value of remittances
We have also experimented with an alternative measure of SMIG, i.e. the stock of population
abroad. The results however did not differ in any appreciable way and are reported in the appendix
(Table A1).
4 More precisely, the chi square test for the homotheticity hypothesis was equal to 2.23 and 3.11
for the equations which include the stock of migrant workers (Table 2) and migrant population
(Table A1) respectively. Notice that in both tables the restriction that the stock of migrants enter the
equation with a unitary coefficient has also been imposed. The relevant chi-square tests (with one
degree of freedom) are equal to 0.62 and 0.38 for Tables 2 and Al respectively.
242 R. Faini
Table 2. The determinants of remittances (Mediterranean countries)
Equation 1 2
Estim. method SURE SURE
rm - rf- dev 0.006 (0.0009) 0.006 (0
In Ym 0.81 (0.27) 0.24 (0.04)
\rvYf -0.04(0.019) -0.03(1)
InRER 0.39 (0.05) 0.45 (0.05)
In SMIG (2) 0.25(1) 0.21(1)
In Rf(t - 1) 0.75 (0.03) 0.79 (0.11)
Log Lik. 79.2 78.04
LM 0.41 0.93
Legenda: rm(rf): host (home) country's interest rate, dev: expected devaluation, Ym(Yj)
(family's) income, RER: real exchange rate, SMIG: stock of migrants.
Notes: (1) constrained coefficient. (2) The stock of workers abroad is used as a measure
of migrants (SMIG).
Standard errors in parentheses. Countries dummies are not reported. The LM procedure
autocorrelation in simultaneous equations models. It is distributed as a chi square with
of freedom.
in terms of the home country's good. We expect therefore the real exchange rate
(defined such that an increase in the index corresponds to a real depreciation) to
have a positive impact on remittances. A real exchange rate coefficient larger than
one would in turn indicate that a real depreciation in the home country leads to
higher remittances even when the latter are expressed in terms of the host coun?
try's good. Overall, three main facts stand out from the results in Table 2. First,
the real exchange rate has a positive impact on remittances. Its coefficient, how?
ever, is systematically lower than one in the short-run, suggesting therefore that
a real depreciation would lead to temporarily lower remittances in terms of
foreign goods. In the long-run, however, the hypothesis that the long-run coeffi?
cient of the real exchange rate be equal to one is clearly rejected5. Overall,
therefore, the long-run impact of a real depreciation on remittances (in terms of
the host country good) will be typically positive. Second, as mentioned earlier, it
was not possible to reject the hypothesis that the sum of the coefficients on the
host and the home countries income was equal to one. This result, together with
the fact that the unconstrained estimate of the coefficient on Yf is negative and
significantly different from zero, seems to suggest that altruistic considerations
are important and do not decline with recipient income. Third, the evidence on
the role of financial factors is mixed. In all the regressions reported in the table,
the difference in nominal assets returns (inclusive of expected depreciation) is sta?
tistically significant. However, the size of the coefficient suggests that financial
factors may not play a substantial role in determining the behaviour of remit?
tances.
To assess the robustness of our conclusions, we extend our empirical analysis
to consider the remittance behaviour of foreign workers in Germany over the
period 1971-1989. Remittances data for Germany6 allow us to distinguish be
The long-run coefficient of the real exchange rate is equal to 2.14, with a ?-statistics of 0.40.
I am very grateful to Werner Smolny for providing me with such data.
Table 3. The determinants of remittances (foreign workers in Germany)
Equation 1 2
Estim. method SURE (1) SURE (2)
rm-rf-dev 0.11(0.09) 0.10(0.10)
lnYm 1.24(0.19) 1.33(0.19)
\nYf -0.40(3) -0.63(3)
InRER 0.44(0.06) 0.30(0.06)
In SMIG 0.30 (0.07) 0.27 (0.09)
time -0.03(0.002) -0.03(0.003)
INFL,Mg -0.01 (0.002)
\nRf(t-l) 0.16 (0.05) 0.30 (0.08)
Log Lik. 107.3 82.9
LM 12.9 15.7
Legenda: see Table 2.

INFLYug: inflation in Yugoslavia
Notes: (1): six-country sample; (2): f
Standard errors in parentheses. Cou
tween six countries of migrant

Yugoslavia). We proceed in th
i.e. we pool together the dat
resulting model by SURE, allow
slope coefficients.
The new set of estimates is
interest rates in Yugoslavia b
over the full sample. We take
(8) taking domestic inflation
tion (column 1); second, we
2)7. In both cases, the restric
to the stock of foreign work
not imposed. One way to expl
pattern of migrations to Ger
migrants' stay together with
altered the remittance behav
in the propensity to remit. T
troduce in the equation a tim
coefficient on the time trend
We are still unable, however
elasticity of remittances wit
that the long-run elasticitie
rejected9. Overall, the result
albeit with some noticeable ex
to be a significant determinant
7 Notice that our estimation proced

restrict our sample to exclude Yugo
8 Elbadawi and Rocha (1992) follo
9 The x2 (with one degree of freed
for column 1 and column 2 respecti
244 R. Faini
of remittances with respect to the real exchange rate is significantly smaller than
one, even in the long-run10. Second, we find no evidence against the hypothesis
of altruistically motivated behaviour. The homotheticity constraint is never re?
jected. Even if we consider the unconstrained estimates, we find that an increase
in recipient income will typically lead to a significant decline in the flow of
remittances11. Finally, it was more difficult to identify in this set of regressions
a significant impact of financial factors. We should recall however that we could
not impose the restriction of a unitary elasticity with respect to the stock of
workers. This raises the suspicion of misspecification, which is further butressed
by the significant value of the Lagrange Multiplier test12.
To sum up, we have seen how remittances provide a substantial contribution
to foreign exchange earnings for many developing countries. At the same time, it
was shown how workers' remittances are affected by key macroeconomic variables
such as interest rates and particularly exchange rates. Both sets of regressions in?
dicate a substantial impact of the real exchange rate. They also suggest that remit?
tances are negatively related to income in the migrants' home country. This find?
ings would seem to suggest that altruistic considerations are a major determinant
of remittance behaviour.
3. Conclusions
The main message of this paper is that workers remittances matter at an aggregate
level both because of their sheer size and their responsiveness to key macroeco?
nomic variables. We have argued with the help of a simple choice-theoretical
model that the real exchange rate should play a significant role in affecting the
long-run desired level of workers' remittances. Encouraging support in this
respect came from the estimation of an aggregate remittance function for Moroc?
co, Portugal, Tunisia, Turkey and Yugoslavia. Further support came from an
analysis of remittance behaviour by foreign workers in Germany. One general im?
plication of these results is that policy-makers may want to devote more attention
to the behaviour of remittances in the design of adjustment programs.
Data appendix
SMIG: Elbadawi and Rocha (1992) and national sources.

rm, rf: International Financial Statistics and national sources.
RER: X aielPlm/Pf> where the index / refers to the migrant's destination coun?
try, while e, Pm, and Pf denote the nominal exchange rate, host country and
10 The long-run elasticity of remittances with respect to the real exchange rate is equal to 0.53 and
0.42 for column 1 and column 2 respectively. The associated standard errors are 0.086 and 0.092.
11 The unconstrained coefficient on Ym was equal to -0.31 and -0.68 for the regressions in col?
umns 1 and 2 respectively. The corresponding ?-statistics were 1.94 and 3.01.
12 Monte Carlo evidence, however, suggests that the actual size of the LM test may be significantly
larger than its nominal size. Therefore, the null hypothesis of no serial correlation will often be incor?
rectly rejected (Kiviet 1986).
home country prices respectively. Both price indices are measured by the CPI. All
data come from the International Financial Statistics.
Ym, Yf. World Tables.

R: IMF, Balance of Payments Statistics and national sources.
Table A1. The determinants of remittances (Mediterranean countries) (Dep. Var.: \nRj-{t))
Equation 1 2
Estim. method SURE SURE
rm-rf-dev 0.005 (0.0008) 0.005 (0.000
In Ym 0.83 (0.24) 0.26 (0.04)
\nYf -0.03(0.017) -0.02(1)
InRER 0.37(0.05) 0.45(0.04)
In SMIG (2) 0.28 (1) 0.24 (1)
In Rf(t - 1) 0.72 (0.04) 0.76 (0.03)
Log. lik. 82.2 80.65
LM 0.02 0.13
Legenda: rm{rj): host (home) country's interest rate, dev: expected devaluation, Ym{Yj
(family's) income, RER: real exchange rate, SMIG: stock of migrants.
Notes: (1) constrained coefficient.
(2) The stock of population abroad is used as a measure of the stock of migrants (S
Standard errors in parentheses. Countries dummies are not reported. The LM procedure
autocorrelation in simultaneous equations models. It is distributed as a chi square wit
of freedom.
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Workers Remittances and the Real Exchange Rate: A Quantitative Framework

Author(s): Riccardo Faini

Workers remittances and the real exchange rate

Received March 29, 1993 / Accepted November 10, 1993

Abstract. Workers' remittances represent a sizeable component of international

Workers' remittances represent a sizeable component of international trade flows

Table 1. Export share

Source: Stanton Russell an

2. Remittances and the real exchange rate

b) The role of the real exchange rate

Cf= Yf+XR= Yf+Rf (2)

of ? on the real exchange rate responsiveness of remittances is harder to assess.

^-? = A(yfy, (7)

\nRf(t) = a0 + ailnSMlG + a2\n Ym + a3 In Yf+aA\nX

Table 2. The determinants of remittances (Mediterranean countries)

Table 3. The determinants of remittances (foreign workers in Germany)

Legenda: see Table 2.

tween six countries of migrant

7 Notice that our estimation proced

SMIG: Elbadawi and Rocha (1992) and national sources.

Ym, Yf. World Tables.

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