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1
International Migration
2
International migration: the basic numbers
• Between 1965 and 2000, the fraction of people living outside their countries of birth increased from 2.2% to 2.9% of world population – 175 million people in 2000
• Remittances have been huge and growing
Sources: UN International Migration Report 2002, US Census Bureau.
Remittances vs. ODA, FDI(1991-2005)
Source: World Development Indicators 2007. Data are in current US$.
3
4
Key questions
• How does emigration to the rich world affect the economic outcomes of migrants themselves?
• How does emigration to the rich world affect families left behind, and origin-country economies more broadly?
• What policies might help raise the development impact of remittances?
Clemens and Pritchett (2008)
• A new statistic, income per natural: the mean annual income of persons born in a given country, regardless of where that person now resides
• Almost 43 million people live in a group of countries whose income per natural collectively is 50% higher than GDP per resident– For 1.1 billion people the difference exceeds 10%
• Poverty estimates are very different for national residents and naturals– 26 percent of Haitian naturals who are not poor by the two-dollar-a-
day standard live in the United States
• “If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.”
5
Table 2b
6
Table 2b
7
Causal effect of migration
• But what is the causal effect of migration?
• Observed income differences could reflect:– Labor-supply effect– Selection effect– Causal effect of migration
• Clemens and Pritchett (2008) review a variety of studies finding that at least 75% of the income difference is the causal effect of migration
• Next: examine one important study providing estimated causal impact of migration on income:– Gibson, McKenzie, and Stillman (2006)
8
Gibson, McKenzie, and Stillman (2006)
• What is the impact of migration on the migrants?– One of the most difficult problems in migration studies, due to
selectivity of migration– Very difficult to find an appropriate or convincing control group
• This paper: use a lottery to obtain exogenous variation in migration– Lottery for Tongans to migrate to New Zealand
• Estimate income gains from migration, using lottery as exogenous variation
• Compare estimates from lottery to OLS, single-difference, double-difference, IV, propensity score matching
• Results: IV with a “good” instrument performs best– D-in-D and propensity score matching do OK as well
9
Table 3
10
Table 4
11
Table 5
12
Table 6
13
14
Key questions
• How does emigration to the rich world affect the economic outcomes of migrants themselves?
• How does emigration to the rich world affect families left behind, and origin-country economies more broadly?
• What policies might help raise the development impact of remittances?
15
Yang (2008)
• What are impacts on families left behind? – Specifically, what do remittances help pay for at home?
• Another natural experiment– June 1997: 6% of households in the Philippines had one or
more members working overseas, in dozens of countries
• July 1997: Asian financial crisis occurs– Large, sudden, heterogeneous changes in exchange rates
in many locations of Filipino workers (see figure)– Philippine peso also depreciates
• Examine impact of migrant exchange rate shocks on Philippine households
16
Saudi Arabia29%
Hong Kong, China11%
Taiw an8%
Singapore7%
Japan6%
United States6%
Malaysia4%
Italy3%
Kuw ait3%
United Arab Emirates
3%
Greece2%
Korea, Rep.2%
Other16%
Distribution of Overseas Workers from Philippines(June 1997)
17
Exchange rates over time
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Jul9
6
Aug
96
Sep9
6
Oct
96
Nov
96
Dec
96
Jan9
7
Feb9
7
Mar
97
Apr
97
May
97
Jun9
7
Jul9
7
Aug
97
Sep9
7
Oct
97
Nov
97
Dec
97
Jan9
8
Feb9
8
Mar
98
Apr
98
May
98
Jun9
8
Jul9
8
Aug
98
Sep9
8
Oct
98
Month
Exchange Rates in Selected Locations of Overseas Filipinos (Jul 1996 - Oct 1998)
Malaysia
Korea
Taiwan
US, Hong Kong,Saudi Arabia, Kuwait
Singapore
Japan
Start of Asian
financial crisis
(July 1997)
Ph
ilip
pin
e p
esos
per
un
it o
f fo
reig
n c
urr
ency
(Ju
ly 1
996
= 1
)
18
MYS
ARE
BRN
HKG
SGPKWT
TAI
SAUCAN
ITA
MNP
QAT
BHR
AUS
GRC
USA
GBR
KOR
JPN
NOR
-80%
-60%
-40%
-20%
0%20
%40
%60
%80
%
0% 10% 20% 30% 40% 50% 60%
NOTES–Exchange rates are in Philippine pesos per unit of foreign currency. Percent change in exchange rate is mean exchange rate from Oct 1997 to Sep 1998 minus mean exchange rate from July 1996 to June 1997, divided by the latter. Mean remittances are calculated among all households with a single migrant in given overseas location. Percent change in mean remittances is between Jan - Jun 1997 and Apr-Sep 1998 reporting periods. Datapoints are the top 20 locations of Philippine overseas workers (as listed in Table 1).
Figure 1: Impact of migrant exchange rate shocks on Philippine household remittance receipts (1997-1998)
Per
cent
cha
nge
in m
ean
rem
itta
nces
Percent change in exchange rate
19
Impact of migrant shocks on households
Outcome Value prior to crisisImpact of 25% improvement in migrant's exchange rate vs. Philippine Peso
Remittances 40% of household income
Increases by 6.0 percentage points
Probability of being below poverty line 9% of households Declines by 1.5 percentage points
Educational expenditures 5.4% of household income
Increases by 0.7 percentage points
Probability of attending school (ages 10-17) Girls 95% Increases by 3.3 percentage points Boys 93% Increases by 1.7 percentage points
Average hours worked per week (ages 10-17) Girls 0.64 Declines by 0.54 hours/week Boys 1.53 Declines by 0.81 hours/week
Total hours worked in self-employment by household members (per week)
21.5 Increases by 2.5 hours
Probability of owning a: Television 83% Increases by 2.4 percentage points Living room set 68% Increases by 1.5 percentage points Vehicle (jeep, motorcycle, or car) 13% Increases by 3.6 percentage points
20
Key questions
• How does emigration to the rich world affect the economic outcomes of migrants themselves?
• How does emigration to the rich world affect families left behind, and origin-country economies more broadly?
• What policies might help raise the development impact of remittances?
Raising development impact of remittances
• An open area
• Increasing migrant control over remittance uses– El Salvador Study of Migrant Families
• Remittances for microenterprise finance– Migrant-backed loans– Migrant co-signed loans
• Other ideas?
21
22
Nava Ashraf, Harvard Business School
Diego Aycinena, Francisco Marroquin University
Claudia Martinez, University of Chile
Dean Yang, University of Michigan
Intro slide
Remittances and The Problem of Control:A Field Experiment Among Migrants from
El Salvador
23
DC-area Salvadorans on the problem of control
“I have many uncles and they get drunk, so I just send money when needed, or I send to someone like my sister who I trust.”
Male, 34 years old, 8 months in the U.S., works as roofer
“The brother of my boss sent around $50,000 to his mother over the years. When he thought he had enough money to build a house, he asked his mom for the money. She said she didn't have it. She had lent it to an uncle. When he asked for the money back, the uncle threatened to kill him if he came back to El Salvador for the money.”
Male, 30 years old, 1 year in the U.S., works as a carpenter
Some open questions about remittances
• Do migrants and recipients typically agree on the uses to which remittances should be put?
• If not, how do such disagreements affect…– the choice of remittance recipients?– amounts remitted?– remittance uses?
• If migrants were to be given more control over remittance uses…– would they remit more?– how would they direct them to be used?– what would be the impact on household-level
development outcomes?
24
Remittances and savings
• This research focuses on the control that migrants have over how much of remittances are saved
• Migrants frequently report wanting household to save some fraction of remittances– Savings potentially intended for use of either recipient or
migrant
• Migrants report stronger preferences that remittances be saved, compared to recipients
• Migrants have little or no ability to control or monitor household savings in El Salvador– Can only request that household save a portion of cash
received
25
Why would migrants save in home country?
• If savings intended for regular use of family back home, U.S.-based accounts are inconvenient
• If savings intended for U.S.-based migrant, many migrants consider U.S. savings insecure– Undocumented migrants fear they would lose savings in
the U.S. if they were deported
• Currently an open question whether savings accounts are primarily for recipients’ or migrants’ use
26
The experiment
• We offered Salvadoran migrants in Washington, D.C. the ability to directly channel remittances into savings accounts in El Salvador– Facilities developed for project in partnership with Salvadoran
bank, previously not widely available
• We randomly varied the degree of migrant control over accounts offered
• Outcomes of interest:– Demand for accounts (take-up)– Savings accumulation– Remittances (identity of recipients, amounts)– Later household outcomes
• E.g., consumption, schooling, entrepreneurial investment, housing
27
Theoretical impacts
• How should remittances change if migrants had more control over savings in the home country?
• Case 1: funds saved out of remittances intended for use of recipient household– If migrant and recipient have similar savings preferences,
increasing migrant control should have little or no effect– If migrants prefer recipient to save more, then increasing
migrant control should lead to higher remittances and savings
• Case 2: funds saved out of remittances intended for use of remitter (migrant)– Funds entrusted to remittance recipient, but monitoring is
imperfect: a principal-agent problem– Increasing migrant control over savings could lead to higher
savings (by migrant), but lower remittance flows to family
Treatments
0. Control group– Migrants encouraged to remit into a household member’s bank
account, but no account-opening assistance provided
1. Account for remittance recipient in El Salvador– Migrants encouraged to remit into an individual’s bank account– If no such account exists, offer to help household set up account– Migrant cannot check balance or withdraw
2. Joint account (for migrant and household)– Migrants encouraged to remit into shared account– New product: “Cuenta Unidos”– Migrant and hh each have ATM cards; migrant can check balance
3. Individual migrant account– Migrants encouraged to remit into own account– New product: “Ahorro Directo”– Only migrant has ATM card– Not shared with household
Marketing brochures
Ahorro Directo Cuenta Unidos
30
Rationales for treatment conditions
0. Control group: Provides counterfactual for assessing impact of offered savings facilities on later household outcomes (savings, remittances, consumption, investment, etc.)
1. Account for remittance recipient: Provides counterfactual of demand for accounts where migrants have no control– If no differences vs. 2 and 3, indicates migrants don’t value
control
2. Joint account (for migrant and household): Impact of having shared control over account– Monitoring of account balance– Shared ownership– But El Salvador joint owner has full ability to withdraw
3. Individual migrant account: Impact of exclusive control over account
Hypotheses to be tested
• Hypothesis 1: Take-up of new savings products will be…– Highest for Treatment 3 (individual migrant account) – Next-highest for Treatment 2 (joint account)– Lowest for Treatment 1 (account for remittance recipient)– Difference should reflect value migrants place on control
over savings
• Hypothesis 2: Growth in migrant savings will be…– Highest for Treatment 3– Next-highest for Treatment 2– Next-highest for Treatment 1– Smallest for Treatment 0
• In later rounds, will examine effects on other household investment activities, such as schooling, health spending, entrepreneurship
Overview of treatment protocols
• Migrants recruited at Salvadoran consulates and Banagricola remittance agencies– Must have remitted to someone in El Salvador in last 12 months, and
have been in U.S. for <15 years– Subsample of migrants and recipient households administered
comprehensive baseline survey
• Migrants randomly assigned to one of 4 experimental conditions– After stratification by gender, US account status, years in US (3
categories), and relationship to recipient (4 categories)
• Marketing team member visits each migrant in person to administer treatment
• Visits take place in location of migrant’s choice– Typically: home, workplace, restaurant, nearest Banagricola agency– Some visits arranged in advance, others occur on the spot
33
ESSMF marketing team
34
Marketing visit (1)
35
Marketing visit (2)
36
Equalizing transaction costs
• Account-opening costs– For all account types, account opening requires visit by
remittance recipient to a Banco Agricola branch in El Salvador
• Remittance transfer cost– All accounts have equal cost of inbound remittance – Inbound remittance costs also equalized with cash
remittance
37
Remittance price randomization
• Remittance prices randomized between $4 and $9– For a remittance up to $1500– VIP card used to track remittances
• Will examine price elasticity of remittances
38
39
Baseline survey contents
• Demographics, household composition
• Employment and income
• Detailed consumption in US and El Salvador
• Use of financial services– Savings– Remittances– Credit
• Financial literacy, planning
• Communication and conflict with family
• Migration history
Migrant survey – Washington DC
40
41
Household survey – El Salvador
Basic summary statistics
• Demographics– 29% female– Mean age: 30.8– Mean years in US: 5.47
• Employment and income– Top employment categories are construction (32%), food services
(15%), cleaning services (10%)– For migrant, median annual earnings is $17,945 for surveyed
individual and $25,458 for household– For recipient household, median annual income: $2,864
• Remittances– Most common remittance amount sent: $200 (25%)– Median annual remittances: $3,900– Median remittances as share of migrant hh income: 14.4%
42
Sources of income in recipient households
43
44
Communication with family
• 86% of migrants have a cellphone
• 94% of migrants have not visited in the past 3 years (proxy for legal status)
• 81% of migrants communicate at least once a week
Methods of communicating with family
45
46
Savings: migrant
• 69% have a savings account– 51% have one in US only– 9% have one in El Salvador only– 9% have one in both countries
• But savings are quite low for most migrants– Median savings: $700– Median savings as % of annual hh income: 2.8%
• Migrants express desire for more savings– 37% “very unsatisfied” or “unsatisfied” with current level of
savings– 85% would open account in El Salvador if given opportunity
to do so
47
Savings: recipient household
• Only 21% have a savings account
• Savings are low– Median savings: $0 (mean savings: $301)
Revealing preferences for remittance uses
• Goal: Reveal via survey answers whether migrants and households differ in their preferences over how remittances are used
• Problem: simply asking migrants and households about their expenditure preferences may not yield useful answers– Answers may be automatic, conditioned by what
respondents think is the “right” answer– Respondents may not think carefully (in way they would if
actual money were at stake)
• Our approach: enter respondents into a “remittance raffle”– Winning family in El Salvador will receive remittance of
$100– Migrants specify how they would like the money to be used
by recipients– Household respondent specifies how they would like the
money to be used when received– 13 categories of expenditures– “Cash” is not an option
Raffle use categories
• Daily consumption• Clothing• Housing (includes rent, construction, mortgage)• Medical expenditures• Educational expenses• Utilities bills• Phone bills• Agricultural inputs• Small business expenses• Savings• Durable goods• Automobile payments• Other (specify)
Question: Do migrants allocate more money to certain expenditures than the corresponding remittance-receiving households?
Allocations of $100 raffle winnings
50
Migrant
Allocations of $100 raffle winnings
51
Migrant Remittance recipient
Migrant vs. household raffle winnings allocation (US$)
Raffle use categories Migrant (in U.S.)
Remittance Recipient (in El Salvador)
Difference (migrant minus
recipient allocation)
P-value: test of equality of
means
Daily consumption 43.96 63.76 -19.80 0.000Savings 17.49 2.45 15.04 0.000Clothing 6.91 6.05 0.86 0.296Housing 3.79 2.18 1.61 0.013Medical expenditures 9.01 7.83 1.18 0.235Educational expenses 4.07 6.26 -2.19 0.003Utilities bills 3.36 3.53 -0.17 0.785Small business expenses 2.93 1.00 1.93 0.001Phone bills 1.36 0.55 0.81 0.023Agricultural inputs 0.25 0.35 -0.10 0.638Durable goods 0.41 1.11 -0.70 0.041Automobile payments 0.08 0.00 0.08 0.318Other (specify) 6.37 4.92 1.46 0.103
Num. obs. 1,208 1,208
Balance across treatment groups
53
Analysis of take-up decision
• Definition of “take-up”: migrant fills out account-opening forms during marketing visit
• Focus on migrants offered Treatments 1, 2, or 3– Account opening for Treatment 0 requires analysis of
internal bank data or follow-up survey
54
Percentage opening accounts, by treatment
• Percentages of migrants filling out account-opening forms as of May 19, 2008 (236 treatment 1, 253 treatment 2, and 243 treatment 3)
55
Regression specification
• For migrant i :
Yi = + Z2i + Z3i + Xi’+ εi
– Yi = takeup indicator
– Z2i = treatment 2 indicator
– Z3i = treatment 3 indicator
– Xi = vector of control variables (collected at baseline)
Impact of treatments on account opening
57
Dependent variable: Migrant filled out account-opening forms during marketing visit
(1) (2) (3) (4)
Treatment 2 (joint account) 0.148*** 0.148*** 0.169*** 0.172***(0.044) (0.044) (0.060) (0.060)
Treatment 3 (joint account 0.200*** 0.196*** 0.149** 0.150** + indiv. migrant account) (0.045) (0.044) (0.060) (0.061)
Constant 0.331*** 0.445*** 0.472*** 0.759***(0.032) (0.046) (0.061) (0.192)
Controls for stratification variables Y Y YAdditional migrant, recipient controls Y
Observations 732 732 408 408R-squared 0.028 0.078 0.055 0.085
P-value of F-test of equality of 0.234 0.275 0.742 0.716 Treatment 2 and 3 coefficients
* significant at 10%; ** significant at 5%; *** significant at 1%
Impact of treatments on account opening
58
Dependent variable: Migrant filled out account-opening forms during marketing visit
(1) (2) (3) (4)
Treatment 2 (joint account) 0.148*** 0.148*** 0.169*** 0.172***(0.044) (0.044) (0.060) (0.060)
Treatment 3 (joint account 0.200*** 0.196*** 0.149** 0.150** + indiv. migrant account) (0.045) (0.044) (0.060) (0.061)
Constant 0.331*** 0.445*** 0.472*** 0.759***(0.032) (0.046) (0.061) (0.192)
Controls for stratification variables Y Y YAdditional migrant, recipient controls Y
Observations 732 732 408 408R-squared 0.028 0.078 0.055 0.085
P-value of F-test of equality of 0.234 0.275 0.742 0.716 Treatment 2 and 3 coefficients
* significant at 10%; ** significant at 5%; *** significant at 1%
Impact of treatments on account opening
59
Dependent variable: Migrant filled out account-opening forms during marketing visit
(1) (2) (3) (4)
Treatment 2 (joint account) 0.148*** 0.148*** 0.169*** 0.172***(0.044) (0.044) (0.060) (0.060)
Treatment 3 (joint account 0.200*** 0.196*** 0.149** 0.150** + indiv. migrant account) (0.045) (0.044) (0.060) (0.061)
Constant 0.331*** 0.445*** 0.472*** 0.759***(0.032) (0.046) (0.061) (0.192)
Controls for stratification variables Y Y YAdditional migrant, recipient controls Y
Observations 732 732 408 408R-squared 0.028 0.078 0.055 0.085
P-value of F-test of equality of 0.234 0.275 0.742 0.716 Treatment 2 and 3 coefficients
* significant at 10%; ** significant at 5%; *** significant at 1%
Breakdown of accounts in Treatment 3
60Percentages out of 129 individuals opening accounts in Treatment 3 as of May 19,2008.
Other correlates of account opening
Dependent variable: Migrant filled out account-opening forms during marketing visit
Treatment 2 (joint account) 0.148***(0.044)
Treatment 3 (joint account 0.196*** + indiv. migrant account) (0.044)
Migrant is female -0.054(0.040)
Migrant has US bank account -0.055(0.039)
Migrant has been in US 6-10 years -0.129***(0.041)
Migrant has been in US 11-15 years -0.289***(0.059)
Recipient is migrant's spouse 0.010(0.058)
Recipient is migrant's child 0.051(0.087)
Recipient is migrant's other relative 0.048(0.040)
Constant 0.445***(0.046)
Observations 732R-squared 0.078
P-value of F-test of equality of 0.275 Treatment 2 and 3 coefficients
* significant at 10%; ** significant at 5%; *** significant at 1%61
Other correlates of account opening (2)
62
Dependent variable: Migrant filled out account-opening forms during marketing visit
Treatment 2 (joint account) 0.172*** Migrant's years of education 0.003(0.060) (0.005)
Treatment 3 (joint account 0.150** Migrant's raffle allocation to savings 0.000 + indiv. migrant account) (0.061) (0.001)Migrant is female -0.037 Migrant plans for retirement 0.060
(0.059) (0.054)Migrant has US bank account -0.028 Log (migrant's annual income) -0.009
(0.053) (0.013)Migrant has been in US 6-10 years -0.116** Recipient's years of education 0.001
(0.055) (0.005)Migrant has been in US 11-15 years -0.195** Recipient's raffle allocation to savings 0.000
(0.091) (0.002)Recipient is migrant's spouse 0.035 Recipient plans for retirement 0.051
(0.088) (0.076)Recipient is migrant's child 0.112 Log (recipient's hh income) -0.031*
(0.142) (0.018)Recipient is migrant's other relative 0.093 Recipient has bank account -0.163**
(0.058) (0.067)Constant 0.759***
(0.192)
Observations 408R-squared 0.085
P-value of F-test of equality of 0.716 Treatment 2 and 3 coefficients
* significant at 10%; ** significant at 5%; *** significant at 1%
Evidence for migrant control?
• Higher take-up in Treatment 2 and 3 vs. 1 may indicate:– Migrant desire for control, or– Migrant desire for convenience (easy access to funds from
U.S.)
• Take-up is not statistically significantly higher in Treatment 3 vs. 2
• But 95% of migrants opening accounts in treatment 3 open Ahorro Directo (individual migrant account)– Highly suggestive of migrant desire for control
• Data still to come will shed further light: assess whether total savings balances are significantly higher in Treatment 3 vs. 2
63
Heterogeneity in treatment effect
64
Dependent variable: Migrant filled out account-opening forms during marketing visit
Treatment 2 or 3 0.309***(0.080)
(T. 2 or 3) * Migrant has US bank account -0.148*(0.085)
(T. 2 or 3) * Migrant is female 0.082(0.085)
(T. 2 or 3) * Migrant has been in US 6-10 years -0.144(0.088)
(T. 2 or 3) * Migrant has been in US 11-15 years 0.115(0.128)
(T. 2 or 3) * Recipient is migrant's spouse -0.024(0.128)
(T. 2 or 3) * Recipient is migrant's child 0.034(0.176)
(T. 2 or 3) * Recipient is migrant's other relative -0.102(0.086)
Observations 732R-squared 0.093
* significant at 10%; ** significant at 5%; *** significant at 1%
Heterogeneity in treatment effect (2)
65
Dependent variable: Migrant filled out account-opening forms during marketing visit
(2) (3)
Treatment 2 or 3 0.302*** 0.247**(0.106) (0.116)
(T. 2 or 3) * Migrant has US bank account -0.225**(0.113)
(T. 2 or 3) * Migrant has US bank account only -0.110(0.128)
(T. 2 or 3) * Migrant has ES bank account only 0.187(0.187)
(T. 2 or 3) * Migrant has both US and ES bank account -0.458**(0.198)
(T. 2 or 3) * Migrant is female 0.010 0.022(0.118) (0.118)
(T. 2 or 3) * Migrant has been in US 6-10 years -0.054 -0.065(0.118) (0.118)
(T. 2 or 3) * Migrant has been in US 11-15 years 0.308 0.257(0.202) (0.204)
(T. 2 or 3) * Recipient is migrant's spouse -0.160 -0.146(0.186) (0.188)
(T. 2 or 3) * Recipient is migrant's child -0.104 -0.127(0.268) (0.269)
(T. 2 or 3) * Recipient is migrant's other relative 0.001 0.008(0.117) (0.117)
Observations 408 408R-squared 0.075 0.089
* significant at 10%; ** significant at 5%; *** significant at 1%
Heterogeneity in treatment effect (3)
66
Dependent variable: Migrant filled out account-opening forms during marketing visit
Treatment 2 or 3 0.032(0.391)
(T. 2 or 3) * Migrant has US bank account only -0.064 (T. 2 or 3) * Migrant's raffle allocation to savings -0.000(0.135) (0.001)
(T. 2 or 3) * Migrant has ES bank account only 0.194 (T. 2 or 3) * Migrant plans for retirement 0.023(0.197) (0.120)
(T. 2 or 3) * Migrant has both US and ES bank account -0.432** (T. 2 or 3) * Log (migrant's annual income) -0.007(0.205) (0.027)
(T. 2 or 3) * Migrant is female 0.029 (T. 2 or 3) * Recipient's years of education -0.006(0.128) (0.012)
(T. 2 or 3) * Migrant has been in US 6-10 years -0.082 (T. 2 or 3) * Recipient's raffle allocation to savings 0.003(0.123) (0.004)
(T. 2 or 3) * Migrant has been in US 11-15 years 0.188 (T. 2 or 3) * Recipient plans for retirement 0.258(0.212) (0.165)
(T. 2 or 3) * Recipient is migrant's spouse -0.119 (T. 2 or 3) * Log (recipient's hh income) 0.025(0.202) (0.038)
(T. 2 or 3) * Recipient is migrant's child 0.000 (T. 2 or 3) * Recipient has bank account 0.053(0.303) (0.153)
(T. 2 or 3) * Recipient is migrant's other relative 0.057(0.130)
(T. 2 or 3) * Migrant's years of education 0.002(0.012)
Observations 408R-squared 0.128
* significant at 10%; ** significant at 5%; *** significant at 1%
Summary of findings so far
• Migrant demand for savings accounts in El Salvador rises when they are offered more possibility of control over them– Demand is 60% higher when migrants have option of joint
or individual (migrant) ownership over accounts, compared to accounts in the name of someone else in El Salvador
• Increase in take-up when migrants are additionally offered option of individual ownership (vs. joint ownership) is relatively small– But when individual ownership is offered, 95% of migrants
opening accounts avail of individual ownership– Highly suggestive of demand for migrant control
• Additional tests of importance of migrant control await availability of savings data
67
68
To be continued…
• Marketing visits to offer products are continuing through July 2008
• Savings and remittance data will be available in fall 2008
• Follow-up survey in early-mid 2009– Examine effects on remittances, savings, consumption,
investments (education, small enterprises), etc.
Extra slides
69
Principal-agent problem: outline
• Remittances have two functions: 1) funds for investment by migrant (principal), and 2) incentive payments for hh (agent)
• Migrant sends funds for investment k, and hh chooses fraction f that is spent in investment (consuming remainder)– Household must conceal consumption of uninvested funds at cost
c(f)
• Investment returns have random component, and migrant cannot observe f, only total investment returns x– Problem for migrant is how to reduce diversion of funds by hh– Migrant implements incentive scheme for hh based on returns x;
payments to hh are s(x)
• Prediction: ability to directly control investments (e.g., savings, housing, education) raises remittances-as-investment (k) but reduces payments to hhs (s)– Total resources transferred by migrant should rise, even as hh
receives less
Summary statistics
71
Variable Mean Std. Dev. 10th pct. Median 90th pct. Num. Obs.
Treatment 0 (no savings facility offered) 0.23 0.42 0 0 1 956Treatment 1 (remittance recipient account only) 0.25 0.43 0 0 1 956Treatment 2 (joint account) 0.26 0.44 0 0 1 956Treatment 3 (joint + migrant account) 0.25 0.44 0 0 1 956Migrant is female 0.29 0.45 0 0 1 956Migrant has US bank account 0.63 0.48 0 1 1 956Recipient is migrant's parent 0.51 0.50 0 1 1 956Recipient is migrant's spouse 0.13 0.33 0 0 1 956Recipient is migrant's child 0.05 0.22 0 0 0 956Recipient is migrant's other relative 0.30 0.46 0 0 1 956Migrant has been in US 0-5 years 0.51 0.50 0 1 1 956Migrant has been in US 6-10 years 0.37 0.48 0 0 1 956Migrant has been in US 11-15 years 0.12 0.32 0 0 1 956
Migrant's years in the US 5.47 3.51 1 5 10 692Migrant has US bank account only 0.51 0.50 0 1 1 692Migrant has El Salvador bank account only 0.09 0.28 0 0 0 692Migrant has account in both US and El Salvador 0.09 0.29 0 0 0 692Migrant allocation to savings in raffle 19.08 38.95 0 0 100 692Migrant's annual income (US$) 27,110 107,315 4,403 17,945 39,011 666Migrant's household's annual income (US$) 39,760 130,216 6,850 25,458 60,192 692Migrant's years of education 8.43 4.94 1 9 12 648Migrant's age 30.83 7.72 22 29 41 688Migrant's annual remittances sent (US$) 4,851 3,951 1,200 3,900 9,600 692Migrant's remittances as share of annual hh inc. 0.683 3.836 0.033 0.161 0.688 690Migrant's total hh savings balance (US$) 3,531 19,391 0 700 8,000 631Migrant's savings as share of annual hh inc. 0.207 1.050 0.000 0.028 0.299 629Migrant is US citizen 0.01 0.08 0 0 0 689Migrant hh size in U.S. 4.89 2.18 2 5 8 692Migrant is married or partnered 0.60 0.49 0 1 1 687Migrant is coresident with spouse/partner 0.75 0.44 0 1 1 396Recipient allocation to savings in raffle 1.89 13.02 0 0 0 631Recipient's annual hh income (US$) 4,474 7,664 600 2,864 8,751 631Recipient has savings account 0.21 0.41 0 0 1 630Recipient total hh savings balance (US$) 301 1,370 0 0 275 630Recipient's years of education 5.05 5.62 0 3 12 621Recipient's age 47.14 14.98 26 48 67 630Recipient's annual remittances received (US$) 2,645 2,834 250 1,800 5,900 631Recipient hh size 4.59 2.38 2 4 8 631