GLOBAL DEVELOPMENT STUDIES
GLOBAL
DEVELOPMENT STUDIES
Copyright © 2007 International Development Options
All Rights Reserved
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Volume Four Winter 2006-Spring 2007 Numbers 3-4.
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Theme: Global Labor Migration and Emerging Trends in Development Finance: An Assessment of the
Economic and Social Impact of Migrant (Worker) Remittances in Central America and the Caribbean
A THEORY OF MOTIVATIONS TO REMIT TO LATIN AMERICA AND THE CARIBBEAN WITH THE
POSSIBILITY OF RETURN MIGRATION
Ikhalfani Solan
Department of Mathematics and Computer Science,
University of the West Indies, Mona, Kingston, Jamaica.
Dillon Alleyne
Department of Economics
University of the West Indies, Mona, Kingston, Jamaica.
Published Online: February 10, 2017
ABSTRACT
The growing significance of international remittances sent by migrants from developed to developing countries naturally raises the issue of the main motivations of migrants to send remittances. This article focuses on remittances to Latin America and the Caribbean region and develops a theory of migrant remittances, within a two-period framework and argues that migrant motivations may be a mixture of insurance and altruism. The article also captures the uncertainty regarding whether the migrant will remain in the host country by assuming that there is a non-zero probability that the migrant will return to the home country in the second period. An analysis of the model identifies several testable hypotheses about factors that impact the uncertainty of remittance flows. We show that under appropriate assumptions remittances levels depend on the income of the migrant and that of the family in the home country. This is consistent with altruistic remittance motives. Secondly, the level of consumption of family in the home country will influence the level of remittances to recipient households when risk sharing or insurance motives are taken into consideration.