We estimate a remittance model in which we address endogeneity and reverse causality relationships between immigrants’ remittances, pre-transfer income and consumption. In order to take into account the fact that a large share of individuals do not remit, instrumental variable variants of the double-hurdle and Heckit selection models are proposed and estimated by Limited Information ML; semiparametric extensions are considered as robustness checks. Our results for a sample of recent immigrants to Australia show that endogeneity is substantial and that estimates obtained by the methods previously employed in the literature may be misleading if given a behavioral interpretation.

Endogeneity and sample selection in a model for remittances

BETTIN, GIULIA;LUCCHETTI, Riccardo;ZAZZARO, Alberto
2012-01-01

Abstract

We estimate a remittance model in which we address endogeneity and reverse causality relationships between immigrants’ remittances, pre-transfer income and consumption. In order to take into account the fact that a large share of individuals do not remit, instrumental variable variants of the double-hurdle and Heckit selection models are proposed and estimated by Limited Information ML; semiparametric extensions are considered as robustness checks. Our results for a sample of recent immigrants to Australia show that endogeneity is substantial and that estimates obtained by the methods previously employed in the literature may be misleading if given a behavioral interpretation.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11566/69861
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