Ainhoa Aparicio Fenoll (Collegio Carlo Alberto)

“Immigrant Networks and Remittances”

abstract

This paper studies the influence of immigrants’ social networks on remittances, both the probability of remitting and the quantity remitted.  We use the Spanish Migrant Survey, a unique database with detailed information both on immigrant’s residence location and remittances. Our methodology accounts for problems of reverse causality, common unobserved factors, and self-selection by using location and country group fixed effects and instrumental variable estimations. In particular, we use two complementary IV approaches: (i) We  instrument the number of immigrants of a country group in a location using the number of immigrants of that group in a broader area and (ii) we  use an instrument based on the accessibility of the different Spanish geographical areas for each country group. We find that immigrants tend to imitate the remittance behavior of their country group as a consequence of living surrounded by co-nationals.