Remittance Volatility and Asset Accumulation

Susan Pozo, Western Michigan University
Catalina Amuedo-Dorantes, San Diego State University

Remittances and migration are known to impact the consumption and asset accumulation patterns of households. While it is important to understand how changes in the level of transfers from family abroad affects asset accumulation, it is also essential to understand how the regularity and predictability of such inflows influence household asset accumulation. Some households receive remittances on a regular monthly basis. Other households receive these funds irregularly –perhaps when the emigrant returns home or when s/he has extra discretionary income. As a result, while some remittance-receiving households are able to forecast with reasonable precision remittance inflows, other recipient households are unable to do so. These two types of households will likely use the remittance inflows differently. Our study determines how the regularity of remittance receipts affects asset accumulation in remittance-receiving households.