IDEAS home Printed from https://ideas.repec.org/p/wai/econwp/06-02.html
   My bibliography  Save this paper

How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand

Author

Listed:
  • John Gibson

    (University of Waikato)

  • David McKenzie

    (Development Research Group, The World Bank)

  • Halahingano Rohorua

    (University of Waikato)

Abstract

Pacific Island economies are some of the most remittance- dependent in the world. Proposals to lower the costs of sending money across borders are a core recommendation of recent international studies that aim to enhance the development impact of remittances. The potential increase in remittances that recipient countries can expect from such policies depends critically on the sensitivity of remittance transfers to the costs of remitting. This paper provides the first estimates of the cost-elasticity of remittances, using data from a survey of Tongan migrants in New Zealand. The costs of remitting to Tonga are high by international standards and remittances are found to have a negative cost-elasticity with respect to the fixed fee component of money transfer costs. These findings suggest that Pacific Island countries can expect a more than proportionate increase in remittances from a reduction in costs.

Suggested Citation

  • John Gibson & David McKenzie & Halahingano Rohorua, 2006. "How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand," Working Papers in Economics 06/02, University of Waikato.
    • Handle: RePEc:wai:econwp:06/02
    as

    Download full text from publisher

    File URL: https://repec.its.waikato.ac.nz/wai/econwp/0602.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 17, pages 1135-1198, Elsevier.
    2. Brown, Richard P. C., 1997. "Estimating remittance functions for Pacific Island Migrants," World Development, Elsevier, vol. 25(4), pages 613-626, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kaczmarczyk, Pawel, 2013. "Money for Nothing? Ukrainian Immigrants in Poland and their Remitting Behaviors," IZA Discussion Papers 7666, Institute of Labor Economics (IZA).
    2. Deodat E. Adenutsi & Meshach J. Aziakpono & Matthew K. Ocran, 2011. "The Changing Impact Of Macroeconomic Environment On Remittance Inflows In Sub-Saharan Africa," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 3(2 (July)), pages 136-167.
    3. repec:dau:papers:123456789/5559 is not listed on IDEAS
    4. Iryna Kurevina, 2014. "Remittances, Consumption And Investments In Ukraine: VAR/VEC Estimates," Ukrainian Journal Ekonomist, Yuriy Kovalenko, issue 2, pages 11-14, February.
    5. Giulia Bettin, 2012. "The remittance behaviour of African diaspora in Belgium," Economics Bulletin, AccessEcon, vol. 32(2), pages 157-157.
    6. Jamal Bouoiyour & Amal Miftah, 2014. "Why do migrants remit? An insightful analysis for Moroccan case," Working papers of CATT hal-01880332, HAL.
    7. William Collier & Matloob Piracha & Teresa Randazzo, 2018. "Remittances and return migration," Review of Development Economics, Wiley Blackwell, vol. 22(1), pages 174-202, February.
    8. Hulya Ulku, 2012. "Remitting Behaviour of Turkish Migrants: Evidence from Household Data in Germany," Urban Studies, Urban Studies Journal Limited, vol. 49(14), pages 3139-3158, November.
    9. Jamal Bouoiyour & Amal Miftah, 2014. "Why do migrants remit? An insightful analysis for Moroccan case," Working Papers hal-01880332, HAL.
    10. Bettin, Giulia & Paçacı Elitok, Seçil & Straubhaar, Thomas, 2012. "Causes and consequences of the downturn in financial remittances to Turkey: A descriptive approach," Edition HWWI: Chapters, in: Paçacı Elitok, Seçil & Straubhaar, Thomas (ed.), Turkey, migration and the EU, volume 5, pages 133-166, Hamburg Institute of International Economics (HWWI).
    11. repec:dau:papers:123456789/2574 is not listed on IDEAS
    12. Jakhongir Kakhkharov, 2017. "Remittances and household investment in entrepreneurship: The case of Uzbekistan," Discussion Papers in Finance finance:201703, Griffith University, Department of Accounting, Finance and Economics.
    13. Giulia Bettin & Riccardo Lucchetti, 2012. "Interval regression models with endogenous explanatory variables," Empirical Economics, Springer, vol. 43(2), pages 475-498, October.
    14. Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications - Books, The World Bank Group, number 13092.
    15. Don J. DeVoretz & Florin P. Vadean, 2008. "Cultural Differences in the Remittance Behaviour of Households: Evidence from Canadian Micro Data," Studies in Economics 0814, School of Economics, University of Kent.
    16. Eralba CELA, 2014. "Motivations behind the size of remittances. Evidence from Albanians in Italy," Working Papers 406, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    17. Carlos Vargas-Silva & Peng Huang, 2006. "Macroeconomic determinantsof workers' remittances: Hostversus home country's economic conditions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(1), pages 81-99.
    18. François-Charles Wolff & Liliana Ortiz Bello, 2008. "Differences in remittances from US and Spanish migrants in Colombia," Economics Bulletin, AccessEcon, vol. 15(10), pages 1-10.
    19. Mohammad Bayezid Ali, 2012. "Macroeconomic Factors Influencing Foreign Remittances: The Case of Bangladesh," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(3), pages 217-229, July.
    20. Hagen-Zanker, Jessica, 2010. "Modest expectations: Causes and effects of migration on migrant households in source countries," MPRA Paper 29507, University Library of Munich, Germany.
    21. Okayo Alphonsine COULIBALY, 2016. "Les Motivations Microéconomiques Des Transferts De Fonds Au Burkina Faso : La Culture Est-Elle Déterminante ?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 187-208.
    22. Bettin, Giulia & Lucchetti, Riccardo & Zazzaro, Alberto, 2012. "Endogeneity and sample selection in a model for remittances," Journal of Development Economics, Elsevier, vol. 99(2), pages 370-384.

    More about this item

    Keywords

    remittances; cost elasticity; Tonga;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wai:econwp:06/02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Geua Boe-Gibson (email available below). General contact details of provider: https://edirc.repec.org/data/dewaknz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.