Immigrant Integration and Remittance Channel Choice

Abstract

This paper empirically analyses to what extent the level of immigrant integration determines the channel chosen to send remittances (migrant money transfers). In recent years, there has been a large push by the international community to formalize remittances. For this reason, it is important to take note of the effect immigrant integration can have on the remittance channel choice. The data used in this study stems from the Dutch Consumentenbond survey conducted in 2005 which was specifically designed to focus on migrant remittances. This paper investigates immigrant integration at the migrant group level as well as the individual level. For the analysis, a relative measure of immigrant integration is constructed for six migrants groups, making use of various variables, which include: educational attainment, language ability, work force participation, migration history, and others. This ranking is then used to test the affect of the integration of minority ethnic groups living in the Netherlands on remittance channel choice. We hypothesize that the more integrated an ethnic group is in Dutch society, the more likely they are to remit formally (send money transfers through formal institutions). There may be a shift from informal to formal remittances when policies which enhance integration are put into place. This paper finds that the impact of immigrant integration is conditional on other factors. If the migrant sending country has put into place institutional policies (such as banks from the sending country in the host country) to keep close ties to migrants via remittances or if there is lack of access in the recipient country to formal transfers, integration has almost no influence on the remittance channel decision. For this reason, a combination of policies would be best able to tackle the task of incentivizing migrants towards more formal transfers. Key words: remittances, money transfers, immigrant integration