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Abstract

This paper examines the determinants of remittance behavior relying on a dataset of migrants living in the United Kingdom, Germany and the United States who remit to Ghana and Nigeria. Controlling for endogeneity of several independent variables, the model measures the effects on the amount sent of the following variables: Home Country (Ghana or Nigeria), Host Country (United States, United Kingdom or Germany), Remittance Fees, Relationship to the Receiver, Purpose of Remittance, Financial Obligations in the Host Country, and Demographics. The results indicate that remittances are primarily influenced by the purpose of the remittance and from where the remittance is sent. It appears that different generations chose to migrate to different countries, creating differences in income, education and age. These differences along with financial obligations in the host country contribute to higher remittance levels. In regards to the development affects, the results of this paper hint that altruistic reasons for remitting may be associated with higher levels of remittances, while more self-interested reasons for remitting are associated with lower levels of remittances. These results indicate that it may be difficult to design policies to encourage the use of remittances for development purposes, as remittances are primarily used for basic needs.