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  3. American Economic Review
  4. May 2011
  5. Remittances and Income Smoothing

Remittances and Income Smoothing

  • Catalina Amuedo-Dorantes
  • Susan Pozo
American Economic Review
vol. 101, no. 3, May 2011
(pp. 582-87)
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Abstract

Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated.

Citation

Amuedo-Dorantes, Catalina, and Susan Pozo. 2011. "Remittances and Income Smoothing." American Economic Review, 101 (3): 582-87. DOI: 10.1257/aer.101.3.582

Additional Materials

JEL Classification

  • F24 Remittances
  • O12 Microeconomic Analyses of Economic Development
  • O19 International Linkages to Development; Role of International Organizations