Remittances as insurance: evidence from Mexican immigrants
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We argue that remittances are, in part, transferred to the home country to purchase family-provided insurance and self-insurance. We use data on Mexican immigrants with work experience in the United States to capture the motives for sending remittances and use a novel approach to test for the insurance motive by relating host economy risk levels to remittance flows. We find that increases in income risk significantly raises both the propensity and the proportion of labor earnings sent home for family-provided insurance and for self-insurance.
KeywordsWorkers’ remittances Insurance Precautionary saving
JEL ClassificationF22 D8 O16
We are grateful for comments from participants at the Midwest Economics Association Meeting, the Northeast Universities Development Consortium Conference, the Agricultural Economics Department Seminar at the University of California-Davis, the North American Meetings of the Econometric Society, Eskander Alvi, Steve Boucher, Anna Paulson, and two anonymous referees. This research was made possible by Grant Number 1-R03-HD0445-01A0 from the National Institutes of Health.
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