Remittance behaviours of foreigners in Italy
| Published date | 01 April 2016 |
| DOI | http://doi.org/10.1111/imig.12213 |
| Date | 01 April 2016 |
Remittance behaviours of foreigners in Italy
Annalisa Busetta*, Valeria Cetorelli** and Manuela Stranges***
ABSTRACT
This article investigates the determinants of remittance behaviours among foreigners in Italy
and intends to gain a better understanding of the temporal pattern of remittances. The analysis
is based on data from the 2009 “Italian Statistics on Income and Living Conditions of House-
holds with Foreigners”. The decisions on whether to remit and how much to remit are sepa-
rately yet simultaneously estimated using a zero-inflated beta regression model. The findings
reveal that remittances are driven by a mix of altruistic and self-interest motives that may per-
sist for many years. Many covariates included in the model have a different effect on the
propensity to remit and on the relative amount of remittances. We find some evidence that the
average propensity to remit follows an M-shaped trajectory over time. However, the model
specification including only time and time squared proves that the inverted-U shape trajectory,
well-established in the literature, still remains a better choice in terms of parsimoniousness and
flexibility. Among those who remit, time since migration does not have any significant effect
on the normalized amount remitted.
INTRODUCTION
In recent years, many countries have experienced a much more rapid growth in remittance flows
than migration flows, and Italy is in line with this trend. Starting in 1997–98, Italy has gone
through a reversal in the balance of remittances, which until then had been positive due to the siz-
able inflows sent by Italian emigrants to their families of origin. Since then, remittances from Italy
have continuously increased from 588 million euro in 2000 to 7.4 billion in 2011 (Fondazione
Leone Moressa, 2014; ISMU, 2014). In the last two years, remittances from Italy have decreased,
most likely as a result of the economic crisis (Fondazione Leone Moressa, 2014): the total amount
in 2013 was 5.5 billion euro (19.5% from 2012, when the value was 6.8 billion). Such a remark-
able growth in the volume of remittances cannot be fully explained by the increase in the number
of immigrants. In fact, although the number of foreigners residing in Italy rose from 1.3 million in
2000 to 4.6 million in 2011, remittances per capita increased more than threefold over the same
period, from 463 to 1,618 euro (Istat, 2011; Fondazione Leone Moressa, 2014; ISMU, 2014).
The main aim of this article is to analyse the determinants of remittance behaviours among for-
eigners in Italy. Italy has recently become a country of destination for a variety of foreign national
groups, which makes it an interesting case study in the international context. We contribute to
recent research about remittance flows from Italy (see Busetta and Stranges, 2011; Cela et al.,
2010; Cela and Moretti, 2010; Frigeri and Giangaspero, 2010; Giangaspero, 2009) adding another
country case study to the international literature about the determinants of remittances (Unheim and
* University of Palermo
** London School of Economics and Political Science
*** University of Calabria
doi: 10.1111/imig.12213
©2015 The Authors
International Migration ©2015 IOM
International Migration Vol. 54 (2) 2016
ISS N 00 20- 7985 Published by John Wiley & Sons Ltd.
Rowlands, 2012; Ecer and Tompkins, 2013; Makina, 2013). The analysis is based on the 2009
“Statistics of Income and Living Conditions of Households with Foreigners”, i.e. the largest survey
on immigrants ever conducted in Italy.
The article is also intended to enlarge understanding of the temporal pattern of remittances, by
assessing how foreigners’propensity to remit and amount remitted evolve over time. The large
body of literature measuring the effect of time on remittances has given discordant results: many
studies have suggested that remittances decline with the time spent in the host country, others have
argued that they increase over time, still others have found that the effect of time on remittances is
not linear, whereas a small number have pointed out that time does not play any significant role.
The article is structured as follows. In Section 2, we introduce the theoretical framework and
review the existing literature on the determinants of remittances. In Section 3, we describe the data
and methods used for the empirical analysis. In Section 4 we present and discuss our findings.
Concluding remarks follow.
THEORETICAL FRAMEWORK
The literature on remittances is rich in contributions focusing on their micro (e.g. Unheim and
Rowlands, 2012; Appiah-Yeboah et al., 2013; Ecer and Tompkins, 2013; Makina, 2013) and macro
determinants (e.g. Buch and Kuckulenz, 2010) as well as on their consequences (e.g. Mazzucato
et al., 2008; Hansen, 2012; Wagle, 2012). In their seminal work, Lucas and Stark (1985) have
grouped the motivations that lead migrants to allocate part of their earnings to the family of origin
into three categories: “pure altruism”,“pure self-interest”and “tempered altruism”. According to
the first category, the fundamental reason for remitting is the altruistic desire to ensure greater pros-
perity to the family of origin, increasing its level of welfare (mainly by raising the level of con-
sumption of goods and services). The “pure altruism”theory has been used to justify the
remittance decay hypothesis, suggesting that migrants’willingness to remit declines over time with
the weakening of emotional ties and kinship relationships (Czaika and Spray, 2013).
According to “pure self-interest”, the decision of migrants to send remittances is driven by their
own personal interests. Migrants can send money home to raise their position in the family hierar-
chy and hence ensure themselves the family inheritance (Hoddinott, 1994; de la Briere et al.,
1997), to purchase a house, livestock or other goods, to invest in production, trade or craft
(Jim
enez-Mart
ın et al., 2007), to pay for services provided by family members in the home country
(Cox, 1987; Cox et al., 1998), to enhance social prestige and strengthen relationships with the com-
munity of origin in preparation for return (Carling, 2008).
Between these two opposing sets of motivations, the intermediate category of “tempered altru-
ism”(or “enlightened self-interest”) suggests the existence of an inter-temporal, mutually beneficial
contractual agreement between the migrant and the family of origin that typically takes the form of
loan repayment and co-insurance (Hagen-Zanker and Siegel, 2007; Carling 2008). Remittances can
therefore be interpreted as a common household risk-reducing and diversification strategy to cope
with market failures (Stark, 1991a, 1991b; Agarwal and Horowitz, 2002; Amuedo-Dorantes and
Pozo, 2006a) that satisfy the interests of both migrants and the family left behind. TO begin with,
remittances are sent as a repayment for the costs that the family of origin bore for migrant’s educa-
tion and movement to the country of destination; subsequently they are sent as an informal loan to
guarantee the education or facilitate the migration of other family members (Carling, 2008). In this
path, the New Economics of Labour Migration (NELM), pioneered by Stark (Stark and Bloom,
1985; Stark, 1991a, 1991b) and developed by Taylor et al. (2001), moves beyond the neoclassical
model, where migration was perceived as an individual choice seeking to maximize individual
utility (Sjaastad, 1962; Todaro, 1969; Harris and Todaro, 1970) and where remittances find no
Remittance behaviours of foreigners in Italy 99
©2015 The Authors. International Migration ©2015 IOM
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