Do Migrants' Remittances Decline over Time? Evidence from Tongans and Western Samoans in Australia

Abstract

There is concern that Pacific Island economies dependent on remittances of migrants will endure foreign exchange shortages and falling living standards as remittance levels fall because of lower migration rates and the belief that migrants’ willingness to remit declines over time. The empirical validity of the remittance-decay hypothesis has never been tested. From survey data on Tongan and Western Samoan migrants in Sydney, this paper estimates remittance functions using multivariate regression analysis. It is found that the remittance-decay hypothesis has no empirical validity, and migrants are motivated by factors other than altruistic family support, including asset accumulation and investment back home.