Remittances, Transaction Costs, and Informality

Recorded workers' remittances to developing countries reached $167 billion in 2005, bringing increasing attention to these flows as a potential tool for development. In this paper, we explore the determinants of remittances and their associated transaction costs. We find that recorded remittanc...

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Main Authors:	Freund, Caroline, Spatafora, Nikola
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	International Investment Long-term Capital Movements F210 International Migration F220 Geographic Labor Mobility Immigrant Workers J610 International Linkages to Development Role of International Organizations O190
Online Access:	http://hdl.handle.net/10986/5754

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recordtype	oai_dc
spelling	okr-10986-57542021-04-23T14:02:23Z Remittances, Transaction Costs, and Informality Freund, Caroline Spatafora, Nikola International Investment Long-term Capital Movements F210 International Migration F220 Geographic Labor Mobility Immigrant Workers J610 International Linkages to Development Role of International Organizations O190 Recorded workers' remittances to developing countries reached $167 billion in 2005, bringing increasing attention to these flows as a potential tool for development. In this paper, we explore the determinants of remittances and their associated transaction costs. We find that recorded remittances depend positively on the stock of migrants and negatively on transfer costs and exchange rate restrictions. In turn, transfer costs are lower when financial systems are more developed and exchange rates less volatile. The negative impact of transactions costs on remittances suggests that migrants either refrain from sending money home or else remit through informal channels when costs are high. We provide evidence from household surveys supportive of a sizeable informal sector. 2012-03-30T07:34:23Z 2012-03-30T07:34:23Z 2008 Journal Article Journal of Development Economics 03043878 http://hdl.handle.net/10986/5754 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	International Investment Long-term Capital Movements F210 International Migration F220 Geographic Labor Mobility Immigrant Workers J610 International Linkages to Development Role of International Organizations O190
spellingShingle	International Investment Long-term Capital Movements F210 International Migration F220 Geographic Labor Mobility Immigrant Workers J610 International Linkages to Development Role of International Organizations O190 Freund, Caroline Spatafora, Nikola Remittances, Transaction Costs, and Informality
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	Recorded workers' remittances to developing countries reached $167 billion in 2005, bringing increasing attention to these flows as a potential tool for development. In this paper, we explore the determinants of remittances and their associated transaction costs. We find that recorded remittances depend positively on the stock of migrants and negatively on transfer costs and exchange rate restrictions. In turn, transfer costs are lower when financial systems are more developed and exchange rates less volatile. The negative impact of transactions costs on remittances suggests that migrants either refrain from sending money home or else remit through informal channels when costs are high. We provide evidence from household surveys supportive of a sizeable informal sector.
format	Journal Article
author	Freund, Caroline Spatafora, Nikola
author_facet	Freund, Caroline Spatafora, Nikola
author_sort	Freund, Caroline
title	Remittances, Transaction Costs, and Informality
title_short	Remittances, Transaction Costs, and Informality
title_full	Remittances, Transaction Costs, and Informality
title_fullStr	Remittances, Transaction Costs, and Informality
title_full_unstemmed	Remittances, Transaction Costs, and Informality
title_sort	remittances, transaction costs, and informality
publishDate	2012
url	http://hdl.handle.net/10986/5754
_version_	1764396190469718016

Remittances, Transaction Costs, and Informality

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