1. 6/26/20151 Lecture 9: Remittances Are remittances a substitute for Canadian Aid?

2. 6/26/20152 Motivations Altruism: One way –For how long and to whom? Implicit Contract: –For how long and to whom? Combination of both Does motivation differ by Immigration Status? –Temporary vs. Permanent

3. 6/26/20153 Canadian Case Why so little: –Less than 6% of total HH expenditures –Less than 1/3 of foreign-born remit –Largest remittances by older vintage of immigrants –What do remittances look like over life cycle? –What is split between household and charitable remittances?

4. 6/26/20154 Distribution of Remittances

5. 6/26/20155 Table 3: Expenditure Elasticities for Remittances to Persons Calculated from LA/AIDS, 1992/1996 PopulationUncontrolledControlled GroupIncome Group alltop Y/2bottom Y/2 alltop Y/2bottom Y/2 Unrestricted Canadian1.071.271.191.881.731.83 N.Am.&W.Eu.1.291.431.672.282.142.23 S&E European1.011.111.092.071.592.29 Ch.,As.&Oc.1.091.121.091.101.131.09 Restricted for Homogeneity and Symmetry Canadian1.091.251.201.861.701.78 N.Am.&W.Eu.1.291.431.662.252.102.18 S&E European0.981.061.082.081.602.36 Ch.,As.&Oc.1.091.121.10 1.131.09 Notes: Elasticity is computed through the formula, where is the actual mean expenditure share and is the estimated household income coefficient.

6. 6/26/20156 Household Transfers

7. 6/26/20157 Charitable Remittances

8. 6/26/20158 What is done with remittances? Household consumption –Who gets: poorest or middle class –Is it invested: schooling, capital equipment Two for One Mexico Programme Mexican heroes to Mexican exploited Are remittances a substitute for aid or FDI?

9. Debate If Canada wants to aid development it should remove current immigration policy of selecting the highly skilled and allow 250,000 unskilled immigrants to enter yearly.