An Integrated Analysis of Migration and Remittances: Modeling Migration as a Mechanism for Selection

Filiz Garip, Harvard University

Prior work models individuals’ migration and remittance behavior separately and reports mixed empirical results on the distributional impact of remittances in origin communities. This inconsistency may result from selection bias. This study controls for this bias statistically and treats migration as a mechanism for selection in a censored probit model of remittances. This integrated model is tested on data from Thai internal migration and Mexico-U.S. migration flows. The findings show that, in both cases, controlling for migrant selectivity dramatically alters our conclusions about the distributional impact of remittances. While a conventional approach of modeling remittances separately leads us to expect declining inequality in the origin as a result of remittances, the integrated model yields the opposite conclusion. The study concludes that migration and remittances are related processes, and it is crucial for an analysis of remittances to control for the selectivity of migration.