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Endogeneity and sample selection in a model for remittances

Author

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  • Giulia BETTIN

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Riccardo LUCCHETTI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Alberto ZAZZARO

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

We estimate a remittance model in which we address endogeneity and reverse causality relationships between remittances, pre-transfer income and consumption. In order to take into account the fact that a large share of individuals do not remit, instrumental variable variants of the double-hurdle and Heckit selection models are proposed and estimated by Limited Information Maximum Likelihood (LIML). Our results for a sample of recent immigrants to Australia show that endogeneity is substantial and that estimates obtained by the methods previously employed in the literature may be very misleading if given a behavioural interpretation.

Suggested Citation

  • Giulia BETTIN & Riccardo LUCCHETTI & Alberto ZAZZARO, 2011. "Endogeneity and sample selection in a model for remittances," Working Papers 361, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:361
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    More about this item

    Keywords

    migration; remittances; selection models;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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