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Title: Essays on Migration, Altruism, and Intergenerational Mobiilty

Citation Type: Dissertation/Thesis

Publication Year: 2019

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Abstract: This thesis is a collection of essays focused on developmental economics. The first portion is dedicated to the analysis of transaction fees on remitting be- havior and how the existence of transaction costs impact the canonical test of the altruistic remittance motive. The second portion is dedicated to the empirical analysis and estimation of the effect of family migration in Indonesia on the investment in their children’s human capital. Our work contributes to the ongoing discussion in developmental economics on how migration and capital flows impact both those who stay behind and the future generations who might reap the fruits of the investments made by their progenitors. The economic literature on remittances has not settled on what is the driving motive for the large flows of capital transferred by migrants to their home countries. In the first chapter we investigate the role of transfer fees and the cost incurred by migrant remitters on the altruistic remitting motive. We explore a theoretical treatment of the problem of transaction costs induced by the existence of a fee to send capital between two households, and how the distortion affects remitting behavior indirectly through inter-temporal effects on savings decisions. While we have not yet generalized our results to the class of convex functions for a transfer cost, we show in a simple two period model that remittances decrease as a function of increasing remittance fees due to the theoretical increase in savings that the existence of higher fees induce. We then ask how the existence of a transaction cost induced by a transfer fee affects the canonical test of the altruistic motive for inter-household transfers, first elucidated by Becker (1974). Here we find that the distortions from transfer costs negatively impact the inference of altruism from the theoretical limit based on Becker’s test. Finally, we calibrate the model in the context of the Cuban migrant community in the U.S. We find, in a no cost model, that the aggregate time series of remittance flows observed is mostly explained by altruism; and that the calibrated transaction fee assuming migrants are altruistic comes fairly close to the average fees reported in the literature for remittances to Cuba. We argue that this evidences the need to consider the scope of the remittance landscape when inferring the motive of this behavior, especially the altruistic one. In the second chapter we shift focus to migration of households and the associated outcome on children’s schooling attainment. This work is relevant given the increasing migration flows both within and between countries that can have disruptive effects on the family. As such the effects of migration on the household’s children has been a consistent topic within the development lit- erature because of the various dimensions through which migration can impact them. To explore this topic, we turn to the Indonesian Family Life Survey, a longitudinal panel data maintained by the RAND Corporation. We first analyze how internal migration in general affects wage premiums, given that the migration literature finds evidence that expected wage premiums between labor markets is the principal motivation for migration. Then we look at how family migration specifically affects schooling attainment in migrant children. Our analysis is descriptive in nature but points to positive associations in both cases, with family migration reducing the hazard of exiting higher schooling levels in a country where the government is still actively combating child labor, despite its illegality. We take these two qualitative findings from the second chapter to develop in chapter three a simple intergenerational model of family migration and invest- ment in a child’s human capital. Investigating a plausible selection mechanism that plagued the endogeneity in the descriptive work allows us to not only comment on whether a causal effect exists but also on the magnitude and di- rection of effects. In conducting policy experiments we show that inducing family migration via full (or nearly full) subsidy, especially among low-skilled households, leads to higher average wages in the next generation than in the base case where families are tied to their home location. Finally, while relax- ing the migration cost in our estimated model does lead to improvements, we also show that the cheapest policy outcome might be to relax the opportunity costs to educate that still exist in Indonesia, whose effects are greater and the costs arguably lower than a migration policy would accomplish. We also argue that this last result doesn’t diminish the effects of migration, but enhances it as the apparent disparities between labor markets is empirically favoring migration and warrants a further look at regional investments in human cap- ital. And while a full migration subsidy may seem extreme, we note that the Indonesian government has provided impoverished Jawanese the opportunity to move themselves and their families to other islands within Indonesia at no cost through transmigration programs, a topic only lightly touched upon in the literature.

Url: https://ddd.uab.cat/pub/tesis/2018/hdl_10803_665751/ajr1de1.pdf

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Authors: Ramirez, Alberto, J

Institution: Universitat Autono`ma de Barcelona

Department: Economic Analysis

Advisor: Joan Llull

Degree: PhD

Publisher Location:

Pages: 148

Data Collections: IPUMS International

Topics: Migration and Immigration

Countries: Indonesia