Remittance income uncertainty and asset accumulation

Abstract

While a sizable literature has concluded that remittances impact the expenditure patterns of households, we have a limited understanding of how the predictability of these money flows affect their usage by remittance-receiving households. Using data from Mexico, we find that both the size and the uncertainty of remittances raise asset accumulation among recipient households. These results suggest that both the level and the predictability of remittance income should be given full consideration in the analysis of household expenditure patterns and in the design of policies to leverage the most out of remittance inflows into developing economies. JEL codes: F220, J200