The Role of Altruism in Sending and Spending Remittances

Abstract

We investigate the effects of altruism on migrants’ decisions to send money home and on their households’ decisions to invest or to consume those remittances. Previous studies have devoted extensive attention to migrants’ altruism toward recipients and little to recipients’altruism toward migrants. We find that the migrant sends larger remittances home when he feels more altruistic toward other household members, while he may send nothing if he feels less altruistic. We also find that other household members in the home country likely consume rather than invest remittances if they are highly altruistic toward the migrant. Our results may partially explain why countries receiving large remittances do not always make large investments, and suggest that altruism among household members does not necessarily enhance a country’s development and growth through remittances.