Business Cycles and Workers' Remittances: How Do Migrant Workers Respond to Cyclical Movements of GDP At Home?

IMF Working Papers, February 1, 2006

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The paper investigates workers' remittances flows into 12 developing countries over their respective business cycles during 1976-2003.
It finds that countercyclicality of remittance receipts is not commonly observed across these 12 countries.
Remittance behavior is complex: how much to remit depends on multiple factors, and different variables driving remittance behavior are differently affected by the state of economic activity over the business cycle.
The commonly argued tendency that migrant workers remit more during down cycles in the recipient country is not broadly supported by the empirical evidence in this sample.

Sample: remittance flows into 12 developing countries.
Time period covered: 1976-2003.
The study examines remittance behavior over each country’s respective business cycle.
The analysis emphasizes the heterogeneity of remittance responses and the multiple motives and channels (e.g., consumption vs. investment motives) that can produce differing cyclicality patterns.