Remittances and emigration intentions: Evidence from Armenia
| Published date | 01 December 2022 |
| Author | Aleksandr Grigoryan,Knar Khachatryan |
| Date | 01 December 2022 |
| DOI | http://doi.org/10.1111/imig.12980 |
198
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International Migration. 2022;60:198–234.
wileyonlinelibrary.com/journal/imig
Received: 26 Augu st 2021
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Revised: 15 Decem ber 2021
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Accepted: 19 Januar y 2022
DOI: 10.1111/imig.12980
ORIGINAL ARTICLE
Remittances and emigration intentions: Evidence
from Armenia
Aleksandr Grigoryan1,2 | Knar Khachatryan1,3
© 2022 The Auth ors. Internation al Migration © 2022 Int ernational Orga nization for Migra tion.
1Manoogian Si mone College of Busin ess
and Economic s, American Univ ersity of
Armenia, Yerevan, Armenia
2CERGE- EI, Prag ue, Czech Republic
3CERMi, Belgiu m
Correspondence
Knar Khacha tryan, Manoog ian Simone
College of Busin ess and Economics ,
American U niversity of Arme nia, 40,
Baghramyan Ave nue, 0019 Yerevan,
Armenia.
Email: kkhachatryan@aua.am
Abstract
Emigration intentions and e ffects of internatio nal migra-
tion constitute important yet understudied directions of
contemporary migr ation research. In this paper, we analyse
a recent migration w ave in Armenia, using household- level
representative data from 2011. We identify determinants
of emigration intentions w ithin a model framework with
endogenous remittances, instrumented by community-
level factors su ch as budget revenue, budget tran sparency
and community remotenes s. We find that remitt ances help
potential migrants to ease t he migration process, s erving
as a resource rather than as a contractual tool be tween mi-
grants and non- migrants. A lso, remittance recipients with
high emigrati on intentions are mo re likely to be l ocated in
poor communitie s. When distinguishing the destination
country for potential migrant s, post- Soviet versus Western
countries (EU countries or U SA), we find that the ins tru-
ments identif ied for remittances a re more relevant for
individuals targeting the pos t- S oviet area (mainly Ru ssia).
Nevertheless, remittances remain a significant resource for
migrating to Western countries . The two pools of potential
migrants considerably differ in the main set of skill char-
acteristics : high- skilled potential migrants opt for Western
countries (brain drain), w hile the low- skilled prefer p ost-
Soviet countries as a destination. We discuss our res ults
from the socio- economic development perspective, such
as the threat of chain migration inherent to poor com muni-
ties and th e whole country. Our f indings contribute to th e
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199
REMITTANCES AND EMIGRATION INTENTIONS
INTRODUCTION
Migration is an inextricable part of development with complex implications for migrant- sending societies
(Abramit zky et al., 2013; Massey, 198 9). On a decision- making le vel, migration i s a familial a rrangement with an
underlying contractual re lationship betwee n migrants and their families (Stark & Bloom , 1985). Chan nels linking
migration and remit tances are numerous and interconne cted, and in order to captur e the in trinsic mecha nism,
empirical studies should be theory driven (Cohen, 2005; Mas sey & Zenteno, 1999). From the macroeconomic
perspect ive, among oth er consequences , migration e ntails flow of remittances , which benef it transition econo-
mies by reducing povert y (Adams & Page, 2005; McKe nzie & Rapopo rt, 2010) and may hur t them by d istorting
growth (Jahjah et al., 200 3). Remit tances can serve as a c redible signal for no n- migra nt members to leave the
home coun try, resulting in chain migr ation (Van Da len et al., 2005b). The ch annel can a lso generate brain drain
from migrant- sending countries, as the more skilled and educated emigr ate (Docquier & Mar fouk, 2006). On th e
contrary, r emittances may reduce future emigration by relaxing wealt h constraints and serving as insurance for
non- migrant famil y members (Taylor, 1999).
A diff erent st rand of re cent lit eratur e shows tha t remitt ances s erve as si gnals of f inancia l succes s of the rem it-
ters and t heir well- being in t he host country and, in- turn, create positive intentions to migrate (Dimova & Wolff,
2015; Leeves, 2009; Pir acha & Saraogi, 2017; Van Dal en et al., 2005a).
In this paper, we study the effect of remittances on emigration intentions for one of the former Soviet Union
countries, Armenia , using countr y repr esentative data from the pe riod of Decemb er 2011 to January 2012.
Former Soviet states, as a specific bloc of the developing world, have already faced huge migration flows in their
early sta ge of independence, along with broken t raditional trade links, reciproca l territorial claims , civil wars and
ethnic cleansin g (Tishkov et al., 2005).1 While Ar menia has been one of t he most developed S oviet Republics , the
geopolitica l issues with it s two neighbouri ng countries provi ded minimal oppor tunities to st art building an inde-
pendent, he althy- gro wing economy with a promisin g future. Over more than 3 0 years of independen ce, Armenia
has been hit by numerous ad verse shocks resulting in rat her low resilience and absorptio n capability. The country
has also experie nced high rates of emigration an d remittance inflows. Remi ttances play a central role i n shaping a
migration- related decision. The Arme nian economy is heavily dep endent on remittanc es. According to the World
Bank, in 2009– 2013, personal remittances amounted to 21 per cent of GDP for Armenia, the fourth largest ratio
among 257 countrie s (after Nepal, Moldova an d Haiti). Detailed insigh ts on the flows are present ed in Appendix.
Our pa per con tribu tes to the migrat ion lite rature in sever al aspec ts. Fi rst, we add to the knowled ge on cont ex-
tual varia bles explaining variation in remi ttances in th e framework of migration decisions . We instrument remit-
tances by communit y- level f actors such as budget revenue, bu dget transparency and set tlement remoteness. We
elaborate on the role of community budget revenue in selecting remittance recipients, particularly inclined to em-
igration. S econd, we show tha t recent evidence o n the relevance of remittances in shaping migration intentions,
which is servin g as a resource for a migrant rather than as a cont ractual tool between mig rants and non- migrants,
is conf irmed aft er properl y controlling for endogeneity. T hird, we add a novel el ement to the exis ting empir i-
cal literature on post- Soviet states, by allowing different iation of migration flows t o post- Soviet and Wester n
countries, con ditioned by individuals’ int ellectual and technic al skills (such as education , language knowledge and
computer l iteracy). The breakdown betwee n motivations for migration to post- Sov iet versus Weste rn countries
is important p rovided that the utilization of re mittances may not be straig htforward and can dep end on migrants’
integration into the recei ving society and on the structure of economic oppo rtunities in sending areas (Binford,
2003; Mooney, 2004).
understand ing of the relationship between migrat ion and
remittances fo r countries with similar settings .
200
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GRIGO RYAN ANd KHACHATRYAN
LITERATURE REVIEW
Theoretical p erspectives stress the importance of viewing migration as a developmental phenomenon for
which applic ation of distinct the ories in isolation may f ail to uncover the compl ex realities (De Haas, 2010). In
the New Economics of Labor Migratio n (NELM) literat ure, two t ypes of motive s are identif ied for expl aining
the existen ce and nature of remi ttances: altruis m (Lucas & Stark, 1985; Stark & Lucas, 1988 ; Van Dalen et al.,
2005 among others) and self- interest. In the second category, there are numerous motives assuming implicit
contractual relationship: bequest (Bernheim et al., 1985; Hoddinott , 1994), accumulation of wealth (Dustmann
& Kirchkamp, 2002), covering education al costs of household (Luca s & Stark, 1985), alloca ting risks (Cox et al.,
1998; Sta rk & Lucas, 1988) a nd exchange of various typ es of services with remi ttances (Rapopor t & Docquier,
2006).
A diffe rent strand of recent lite rature shows that remittan ces serve a s signals of financial succe ss of the
remitters and their wel l- being in the hos t country and , in- t urn, create po sitive intentions to migrate (Dimova
& Wolff, 2015; Leeves, 20 09; Piracha & Sara ogi, 2017; Van Dalen et al., 20 05a). Van Dalen et al. (2005a) sho w
that the impac t of remittances on non- migrants’ emi gration inten tions is positive in all the thre e countries
they study (Egypt, Turkey and Morocco) with different mechanisms behind the link differing across the three
countries, such as strength of the family ties and the signall ing effect of remitta nces. Evidence from Bosnia
and Her zegovina shows that young a nd highly ed ucated househ old members intend to e migrate, sugges ting
that the effe ct of remittances o n the economy is rather n egative (Dimova & Wolff, 2015). Pi racha and Sar aogi
(2017) use infor mation on bank accoun t to ins trument the remittanc e variable and find that t here is a dual
causality between receipt of remittances by non- migrants and their migration intentions. They claim that re-
mittance s not only relieve cre dit constraints i n the home countr y but also act as a si gnalling device of suc cess
in the host co untry.
Our study add ressed the following gap s in the exiting literatur e that are manifold. More sp ecifically, potential
endogeneit y of remit tances whe n explaining migration intentions is not control led in Van Dalen et al. (20 05a),
households with any retur n migrant s are not incl uded in the sample (Le eves, 2009; Van D alen et al., 2005a),
mechanisms thro ugh which remittances affec t migration intentions are not identif ied (Dimova & Wolff, 2015) and
selected ins truments are not eff icient for small countries (P iracha & Saraogi, 20 17).
In o ur study, we br ing instr uments as contextual variable s and identify channels through which remi t-
tances amplify migration intentions. Our instruments utilize differences in community- level developments
captured by budget income and transparency indicators, the number of communities being sufficiently large
for a sma ll country. We d o not differ entiate hou seholds wit h and witho ut return mig rants, as t he instrum ents
allow to isolate the effec t of pa st migration on the causal relationship between r emittances and migratio n
intentions.
Furthermor e, to the best of our knowledge, our study is the pioneer in the scholarly literature o n exam-
ining the causal relationship between remittances and emigration in Armenia. We add a novel element to the
empirical liter ature by suggesting a mec hanism that allows to diffe rentiate migration flows to po st- Soviet and
Western count ries conditioned by individuals’ i ntellectual and technical skills. To date most studi es of migra-
tion in A rmenia have been restricted to the determinants of migration, t he socio- economic c haracteristics of
migrants (Agadjanian & Sevoyan, 2014; Antinyan & Cor azzini, 2018; Grigorian & Melkonyan, 2011; Menjívar &
Agadjanian, 20 07) and the positive and negative effect s of migration an d remittances on country's eco nomic
development (Azam & Khan, 20 11). Dermendzhieva (20 11) provides cross- country empirical evidence on la-
bour m igratio n for count ries in th e South C aucasus . The auth or finds n o evidenc e of massiv e migrati on among
skilled worker s. However, individuals with h igher education are m ore likely to emigrate to hig h- income OECD
countries fro m the capital of Ar menia.
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