Economic Resources, Financial Aid and Remittances

Abstract

According to the World Bank, in 2017, an estimated 450 billion US dollars in remittances were sent to Low and Middle Income Countries. This means that the sum of remittances is more than three times larger than the sum of the world's total official aid to the same countries. The practice of sending remittances can be seen as one specific thing that migrants do as part of sustaining ties with their countries of origin. Remittances can be personal gifts, but are often sent in order to support family members and friends in their country of origin living under more difficult economic conditions. Remittances may also be a form of investment or repayments of loans. In this study we use data from the latest Swedish level of living survey LNU-UFB to study the factors influencing the propensity to remit. Using probit estimations, we find that the economic situation of the migrant, demographic variables and the migrants' ties to the home country are important. The propensity to remit also varies by country of origin. With an increasing number of migrants, the propensity to remit will have growing policy implications. It will have implications for Sweden as a donor country, raising issues of complementarity between remittances and official development aid. Migrants' propensity to remit will also be increasingly relevant for Sweden's integration policies, as the motives to remit might shape immigrants' decisions and priorities while settling in Sweden.