Does Economic Uncertainty Foster Migrant Remittances? A Macro-Perspective from 53 Developing Countries

The recent Global Financial Crisis and its resultant policy responses have induced a lot of uncertainty and as a consequence, reinforced research interest in economic uncertainty. Several empirical studies have since examined the effects of uncertainty with emphasis on its growth implications. Despite uncertainty being an integral part of migrants' decision-making process, its effect on remittances remains largely unknown. The present study employs a novel data on uncertainty and a system GMM approach to examine the effects of economic uncertainty on inward remittance of 53 developing countries over the period 1996-2018. The results show that heightened economic uncertainty induced a positive and statistically significant remittance response to developing and least-developed economies. This result is consistent with the altruistic behavior of migrants from developing economies, and further, suggests the importance of migrants' remittances in moderating the potential adverse effects of uncertainty.