Remittances and Subjective Welfare in a Mixed-Motives Model: Evidence from Fiji

To analyze migrants' remittance motivations we extend the mixed-motives model of private transfers developed by Cox et al (2004), incorporating subjectively-assessed recipient welfare. We test the model with customized survey data from Fiji, finding evidence supportive of altruism for households below a subjective threshold level, indicating that international migrants� remittances provide important social protection coverage to households where formal social protection systems are lacking.Unlike previous studies, we also find a positive, exchange-motivated relationship for those above the threshold. The conventional linear model applied to the same sample uncovers neither relationship. We conclude that either crowding-out or crowding-in of remittances can occur when recipients� welfare improves, depending on the household�s pre-transfer welfare level. The net effects of recipients� welfare improvements on remittances, and the effects of remittances on poverty alleviation and income distribution, are consequently more complex and ambiguous than previous studies suggest.