How emigrants try to run their fiscal policies

In survey data collected as part of the study, Washington, D.C.–based migrants from El Salvador report that they would like recipient households to save 21.2 percent of remittance receipts, while recipient households prefer to save only 2.6 percent of receipts.

This is one reason why emigrant workers do not send more back home all at once, namely that the sender does some ex ante forced saving on behalf of the recipient, who otherwise is not trusted to do it.  Remitters also send relatively small sums — typical is $300 — but they send many times a year (16.9 times on average, in one study, despite some fixed costs of sending).  That is to stop the recipient from spending all of the aid at once.

Perhaps you have noticed that cross-national and multilateral aid is also often doled out in multiple parts, rather than all at once.

Is this socially optimal?  Maybe not.  Is this nearly universal?  Possibly so.

The quotation is from Dean Yang, here is more (pdf, see p.12).


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