ABSTRACT
Using data from the Indian state of Kerala, this study aims at investigating how transfers of remittances sent from migrants overseas respond to macroeconomic shocks at the destination.
The 2008 global crisis led to an increasing unemployment rate across Indian emigrants residing in different host countries, together with an appreciation of migrants’ currencies against the Rupees. The Kerala Migration Survey (KMS) is proposed as the data source for analysing the combined effect of these macroeconomic shocks on remittances sent to recipient households that despite the crisis benefited from increasing monetary inflows between 2008 and 2009.
Exploiting the variety of host countries of overseas Indian migrants, and therefore the different intensity of the economic shocks they faced at the onset of the crisis, we applied fixed effect estimations to panel data for the period to understand possible effects on their outflows of remittances.
As expected, the effect of the unemployment rate is different according to migrants’ destination, and while for migrants in the Gulf that represents the high majority of the expatriated in the sample, it has a positive but slightly significant impact, the shock faced in other host countries contributes more effectively to increased remittance outflows. Besides, results show that the effect of the exchange rate shock is relatively small and not significant.
The overall resilient behaviour of monetary transfers that are unaffected but rather expanded after economic shocks overseas is explained as a risk-coping strategy of migrants to self-insure against the economic uncertainty faced at the destination.
