The Determinants of Migrants’ Remittance Inflows in the MENA Region: A Macroeconomic Approach

Abstract

Macroeconomic studies on the determinants of remittance flows have traditionally reviewed the role that economic conditions of host and home countries of migrants play in this process. New contributions have enlarged that setting by dealing with socio-political (demographics, institutions) and individual (education) dimensions influencing migrants' behaviour when they remit money back home. In this investigation, we test for the role of all these variables in a general framework when analysing the case of the MENA (Middle East and North of Africa) region. Results indicate that the state of the business cycle, the characteristics of households (fertility, income per capita), and those of the migrants themselves (mainly education endowments) are the leading factors influencing the volume of such capital entrances. Institutional factors appear to play a secondary, although significant, role. The empirical results suggest altruism, insurance, and investment as the key motives driving remitters' behaviour in the case of the MENA region.