07 September 2021

Neglected Aspects of Migration Economics and Remittances

In the three papers composing his PhD thesis, Rémi Viné deals with issues related to family reunification; remittances and households’ consumption; and the pricing of remittances. They all try to raise curiosity in topics or contexts that have been relatively neglected so far. 

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How did you come to choose your research topic?

My interest in migration economics emerged during the so-called European migrant crisis in the 2010s. Around the globe, migration is going to increase in the coming years and I wanted to contribute to a better understanding of migration patterns as well as of a key tool migrants use: remittances.

Within this frame of interest, the three topics of my research papers have been found in various sources such as discussions, seminars and readings. Family reunification is a highly sensitive topic debated in European countries, in particular regarding its impact on integration. I wanted to bring a different understanding of this topic by investigating the economic drivers of reunification. Regarding remittances, my interest stemmed from the controversy in the literature on remittances as a tool for development. Finally, I wanted to investigate why the prices of remittances differ so widely and are rather costly. 

Can you describe each essay?

The first essay, which deals with family reunification between Africa and Europe, is essentially a theoretical contribution. I build a model based on a representative household, with one spouse in the country of migration and the other in the country of origin, that maximises its utility and chooses accordingly where and when to reunify. The model provides several conclusions about how wages, price levels and costs of migration, among others, affect the duration of separation between the spouses as well as the country where to reunify. In order to compare these theoretical results with a concrete example, I use survey data and survival analysis tools on migration between several countries in Africa and in Europe. I conclude that the theoretical intuitions are mostly verified in the real-world example of South-to-North migration: higher wages in the host country speed up the reunification in that country but slow down the reunification in the source country; higher costs of migration systematically increase the duration of separation; etc. A key contribution of this paper is to highlight that chain migration and return migration can be both derived from family decisions. So far, in economics, these two sorts of migration were separated.

The second essay contributes to a rich literature concerning the impact of remittances on the consumption of the family left behind. I especially investigate whether, at the level of the household, remittances are useful for long-term improvements. I choose Tajikistan as a case study because it has very homogeneous migration patterns, which makes the analysis easier to generalise. In 2009, Tajikistan was the country most dependent on remittances, yet the poorest country in Central Asia. Using survey data, I build a different narrative highlighting the risks of targeting more conspicuous consumption when the household receives remittances. I control for individual time-unvarying heterogeneity and use instruments to offset the endogeneity problems that arise between the choice to send remittances by the migrant and the family’s consumption preferences. Local income and remittances are not treated similarly in the consumption decisions of the households. As pointed by Thorstein Veblen long ago, conspicuous behaviours are not observed uniquely among the richest societies and richest groups within societies.

The third essay sheds lights on the dynamics of the price to pay to send remittances. Using quarterly data at the product level over many countries, I demonstrate that the prices of remittances increase for 18 months after an exogenous change in demand. In order to disentangle the causality between prices and quantity, I propose to use the impact of environmental disasters in the migrant’s country of origin that arguably only directly affects the quantity of the remittances sent. Assuming there is a 15% increase in the quantity remitted in a given country, the extra price to pay 18 months later in order to send USD 200 would be around USD 2.72.

What could be the social or policy implications of your thesis?

I hope that my second paper might be key to give households incentives to spend remittances in a more long-run efficient way. In addition, given that – as shown in my third paper – prices of remittances increase after a demand shock that in turn is due to an environmental disaster, policymakers can build post-disaster policies to reduce or contain the price increase. This will allow the migrants to have higher capabilities regarding when to send remittances and how much of them.

What are you doing now?

I am currently a postdoc at the Graduate Institute, working with Professor Viarengo on research related to migration and development (NCCR – On the move).

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Rémi Pierre Viné defended his PhD thesis in International Economics in May 2021. Assistant Professor Julia Cajal Grossi presided the committee, which included Honorary Professor Slobodan Djajic, supervisor, and Murat Güray Kirdar, Professor, Department of Economics, Boğaziçi University, Turkey.

Full citation of the PhD thesis:
Viné, Rémi Pierre. “Three Essays on Migration Economics and Remittances.” PhD thesis, Graduate Institute of International and Development Studies, Geneva, 2021.
Good to know: members of the Graduate Institute can download the PhD thesis from this page of the Institute’s repository. 

Banner picture: excerpt from Martin Waldseemüller’s 1507 map.
Interview by Nathalie Tanner, Research Office.