Determinants and Uses of Remittances to Southern and Eastern Mediterranean Countries: Insights from a New Survey

Abstract

In this paper, we analyze the determinants and the final use of remittances of migrants settled in France sending remittances to the southern Mediterranean and Sub-Saharan African countries. Research using microdata is very scarce in this region; we rely on a specially designed survey (2MO) we conducted in 2007-2008 of 1,000 people who remit to the three Maghreb countries, to Turkey and to the countries of Sub-Saharan Africa. We also use a second survey conducted by the French Ministry of Social Affairs and Health (DREES) which includes a sample of 3,500 people from the regions we are interested in. DREES microdata set enables us to understand who is more likely to remit (extensive margin). 2MO microdata allows an analysis of remittance behavior amongst those who remit (intensive margin) including sum and reported final use of remittances (housing, investment, current expenditures).

Using these two microdatasets, we examine the likelihood to remit across the different waves of immigrants, the motivations to remit and the intended final use of remittances to highlight behavior differences between the different waves of immigration on the one hand, and on the other hand, the importance of looking beyond classical variables to better understand remittance behavior and its changing nature. Our first result shows that, after controlling for all the variables linked to income, education, age or nationality, subjective variables such as attachment to the home country, history and the institutional context of emigration play a determinant role in explaining remittance behavior. Our second result shows that migrants, who are in France for a long time and who have low education levels, also send remittances in order to invest in their home country. The degree of the migrant’s attachment to his home country thus appears as a discriminating subjective variable. By contrast, the migrants from Sub-Saharan Africa send money for current expenditures rather than for investment. The obligation feeling seems to be the important motivation for remit.

Keywords: Sub-Saharan Africa, Maghreb, Turkey, Mediterranean, remittances, migration

JEL Classification: J61