Remittance Patterns To
Latin American And Caribbean Countries:
Sending Money To The Family Left Behind

Magdalena Rappl
Tennessee Technological University

SECTION I - INTRODUCTION

     The purpose of this project is to acquire knowledge on the principal forces influencing the household income allocation decisions made by remittance recipients in Latin American and Caribbean countries. The secondary purpose is to document the nature of the communication flow between remittance dispatchers and recipients, to document the remittance senders’ evaluation of the efficient use of resources by recipients, to document the actual versus prescribed allocation of remittance funds, and to document past, present, and future improvements in household well-being based on allocations and the joint efforts of originators and recipients.
     Section II describes international remittance markets in a general way, and sheds light on the behavioral patterns and socio-economic characteristics of remittances initiators and recipients. It contains a literature review of applicable studies published during the last ten years, including international agency efforts.
     The next step of this research effort consists of invoking a household demand function and reworking it to acknowledge the significance of the access to remittances and access to valuable information flows stemming from the remittance senders. Section III contains a model of family consumption for Latin American and Caribbean households. This model includes a standard set of prescribed variables, but also explicitly includes non-earned income in the form of remittances received. Another contribution is the inclusion of the number of family members benefiting from the remittance funds. The author additionally incorporates the concept of durable and non-durable market goods, leisure-time consumption, and non-market production and consumption in the household. Finally, a description of changes in household well-being in the past, present, and future is included.
     The household demand decision also becomes a function of a migration-related variable, namely the length of stay of the remittance sender in the USA. Additionally, it becomes a function of the remittance allocation history and the geographic region of the recipient household.
     In Section IV, the author presents the results of a survey that addresses the household income allocation decisions made by remittance recipients, the nature of the personal communications flow between initiators and recipients, an evaluation of the efficient use of resources exercised by dispatchers on recipients, a comparison of actual and prescribed expenditures patterns, and finally, a statement on improvements in household well-being.
     The last section, Section V, contains the Summary, Principal Findings, Conclusions, and Recommendations.

SECTION II - LITERATURE REVIEW
HISTORICAL PREAMBLE

     Remittances are defined as the earned income that foreign-born individuals send back to their families in their countries of origin. In 2006, remittances dispatched to Latin American countries and the Caribbean (LAC) were estimated to total $60 billion, $45 billion of which were sent from the U. S. A. This sum exceeds the flow of foreign direct investments (FDI) to the region, the flow of official development assistance (ODA) to the region, the flow of tourism dollars into the region, and the flow of payments for oil exports from the region. It is estimated that more than 175 million remittance transactions were completed in 2006. The typical remittance amounts were on average of $150, $250, and $350. Remittances in 2006 supplemented the incomes of approximately 25 million families throughout the LAC.
     The largest remittances volumes expressed in current dollar amounts were sent to Mexico, Brazil, and Colombia, totaling over $21 billion, $6.5 billion, and $4.2 billion respectively (Inter-American Development Bank, 2006a).
     The exponential growth of international remittances flowing from the United States to Latin America and the Caribbean has been largely neglected as a field for research for social scientists. Therefore, it remains an unknown phenomenon to most people. It follows that the economic, demographic, and socio-cultural characteristics of remittance senders and recipients remain largely unknown to researchers and laymen alike. For instance, at a microeconomic level, the family allocation practices regarding remittances and, at a macroeconomic level, the development impact of remittances have both been severely under-researched. Subsequently, insightful research is practically non-existent.
     The increasing volume of remittance flows, due to the increasing labor force participation rate, the total volume and the significance of foreign-born workers in the United States labor market, is reaching hundreds of millions of low-income families in Latin American and the Caribbean. It is slowly allowing them to live a more stable and comfortable life above subsistence levels.

REMITTANCE TOPICS

     Data collection and analysis of remittances in recent years has centered on the volume of financial flows (Federal Reserve Bank of Boston, 2005; Inter-American Development Bank, 2004a), the origin of the remittances by state, the growth of remittances, the contribution of the foreign-born workers to their respective local economies (Inter-American Bank, 2004b), impact studies on the region of destination, determination of expenditures and savings patterns, number of immigrants in an area, growth in the number of immigrants, new states of destination for immigrants, percent of workers sending remittances to their families (Suro, 2003; Kingston & Wade, 2004), the frequency of remittances, the average value of the remittances (Orozco, 2003), the modes of transmission of funds (Samuels, 2003; Suro, 2003; Bernanke, 2004), and cost changes in the market for money transfer systems (Orozco, 2002; Orozco, 2004). In summary, the literature on remittance initiators is growing rapidly. Nevertheless, the literature on remittance recipients is practically nonexistent.
     Very few studies have been completed in the area of analysis of the allocation of remittance funds by recipient households (Amuendo-Dorantes, Bansak, & Poxo, 2005), remittance decisions made by dispatching households (Orozco, 2004), the short-term impact on source communities and regions, the impact on financial sector innovations in the source and host countries (Wells Fargo, 2004), and the long-term development effectiveness of remittances to a region.

CHARACTERISTICS OF REMITTANCE DISPATCHERS

     In an effort to understand the remittance sending patterns of immigrants from the Latin American countries, a Multilateral Investment Fund study was conducted in 2004 on remittance senders. The study found that more than 70% of the Hispanic immigrants dispatch remittances to their relatives still residing in LAC. Of these, 60% dispatch remittances regularly and 10% dispatch remittances intermittently. The average remittance consists of $200 to $300.
     The likelihood of sending remittances diminishes over time. Three-quarters of the recent LAC arrivals who have resided in the USA for less than five years send money about once a month. Only two-thirds of the recent arrivals dispatch remittances after having resided in the USA over five years. After ten years of residing in the U.S., only half of the Hispanic immigrants still send money back to LAC. Profound family ties explain why a significant percentage of foreign born Hispanics still remember their relatives and dispatch remittances after 15 to 30 years of leaving their home in LAC (Inter-American Development Bank, 2006a).
     An economic impact study done on the Hispanic immigrant population living in the Memphis, Tennessee area found that their jobs are concentrated in three occupational areas: construction, distribution, and retail trade. Most of the workers are earning between $7 and $10 per hour, and very few are earning as much as $18 per hour. They exhibit one characteristic which is systematically different from the low-wage earner population at large: They maintain high and consistent savings rates. The average Hispanic worker saves about one-third of his net income and remits about 70% of the savings to his family in Latin America (Mendoza, Ciscel, & Smith, 2001).
     One research paper prepared for the Independent Task Force on Immigration and America’s Future by the Pew Hispanic Center (Passel, 2005) shows average family income for Hispanic immigrants as a function of duration of residence. Average family income is clearly higher for those who have resided in the United States for more than 10 years.

CHARACTERISTICS OF REMITTANCE RECIPIENTS

     Very few studies exist on the demographic characteristics and economic behavioral patterns of the remittance recipients residing in LAC. Some of these surveys addressed LAC recipients directly and some collected data from the remittance senders residing in the USA One public opinion survey conducted by the Multilateral Investment Fund in several LAC reported that very large proportions of the adult population (ranging from 16% in Honduras to 28% in El Salvador) have become direct personal recipients of remittances dispatched from the USA The respondents indicated that their immediate family consisting of three or four other persons also benefited from the remittances.
     Remittance recipiency is no longer limited to those living in poverty. The MIF study found that the distribution of family income of the remittance recipient population is very similar to that of the population at large. This widespread reliance on remittances is only recently being recognized by policy makers.

SECTION III - HOUSEHOLD DEMAND FUNCTION OF REMITTANCE RECIPIENTS

    The LAC remittance recipients have an already existing demand curve for goods and services, represented as follows:
                           QDXi = Q[Pxi; Ti, EYi, Pzi, PEi , Mi]                                                                            (1)
     The new demand curve for goods and services, after remittance funds become available is:
                            QDXi = Q[P­xi; Ti, (EYi+NEYi), Pzi, PEi , Mi, Li, Hi, Gi, Ai]                                           (2)

SECTION IV - QUALITATIVE ANALYSIS OF
HOUSEHOLD INCOME ALLOCATION DECISIONS
OBJECTIVES OF THE SURVEY

     The principal objective of this research effort is to study the household income allocation decisions made by remittance recipients in LAC.
     In order to better understand the determinants of these household decisions, the author developed a survey that contains several logical categories:

1. It queries the nature of the communications flow between remittance dispatchers and recipients.
2. It provides remittance dispatchers an opportunity to evaluate how wisely and efficiently the remittances are allocated by the recipients.
3. It searchers for actual distribution patterns of the allocation of funds based on a typical family budget with twenty typical expenditures categories. This will be called the LAC Personal Ranking Index
4. It develops a personal ranking mechanism of preferences and priorities indicated by remittance dispatchers, concerning how remittance funds should be spent. This will be called the USA Personal Ranking Index.
5. With this information, a comparison mechanism of actual and desired expenditure patterns can be established.

ADMINISTRATION OF THE SURVEY

     The survey on remittances of Latin American and Caribbean (LAC) immigrants was conducted on a sample of one hundred and ten heads of households residing in the Middle Tennessee Area. It was translated into Spanish and administered in a private and confidential setting to the dispatchers of the remittances.
     The participants had several days to read it, to gather the information, to discuss it with their families in the U. S. and abroad, and to reflect on this process in general. Thus, information on the remittance recipients and senders alike was gathered by soliciting and compiling data from the remittance initiators, or senders.
     The deep family ties and open communication channels, in general, provided an excellent approximator for household allocation decisions as well as the joint decision-making processes among senders and receivers.

GENERAL DEMOGRAPHIC INFORMATION

     The remittance senders were asked to state their country or region of origin. Fewer than 10% responded that they are from Mexico. Over 80% are from Central America, fewer than 5% are from South America, and fewer than 5% are from the Caribbean.
     Most foreign-born families responding to the survey, namely over one-half, had lived less than five years in the U.S., one-third had lived more than five but less than ten years in the U.S., and about 15% had lived more than ten years in the U. S.
     Considering that money transfer companies, namely remittance sending companies outside the banking system, have captured 70% of the share of this lucrative market, and that wire transfers dominate this area, and that only 17% of the remittances are hand-delivered or mailed in recent years, it was interesting to observe that about 35% stated that remittances arrived at their destination in a few minutes; 55% stated that remittances only take a few hours to arrive; and 10% stated it takes several days.
     Of the foreign-born individuals sampled, 72% responded that they send remittances regularly, and 28% that they send them occasionally.
     The respondents send, on average, eight to twelve remittances per year, on a regular and agreed-upon basis. A subset, comprising 16% of this sample, reported sending between 20 to 30 remittances per year.
     They also admitted to sending extraordinary or unplanned remittances when unexpected eventualities came up, sometimes as many as four per year. The demand for unexpected remittances seems to rise in periods of natural disasters, social calamities, or economic downturns; and so does the supply.

NATURE OF THE COMMUNICATION FLOW

     Remittance dispatchers and recipients on the whole tend to agree over 98% of the time on the allocation of households funds. Most remittance originators replied that remittances were stretched among necessities in the best and most efficient way.
     In an attempt to understand how far-reaching the effects of remittances really are, participants were asked how many family members benefit from the remittances. One quarter of the respondents stated that one or two family members benefit; one–half stated that 3 or 4 family members benefit; and one-quarter that more than 5 benefit. This demonstrates that, on average, a total of 4 family members benefit.
     With regards to the flow of information via an open and honest communication process concerning the allocation of these funds, 98% stated that their families in the country of origin offer to share an accurate account of their expenditures. In fact, recipient families initiate the process of providing information.
     Likewise, 90% of remitters do tend to ask about the expenditures flows, but generally don’t have to because their family back home broaches the subject. If they ask, it is out of concern for the wellbeing of the family.
     100% of remittance dispatchers are very interested in knowing how the money is used, and none indicated that they are only marginally interested or not interested at all. Information is traditionally defined as invaluable resource in the field of economics. In this case, it improves the decision-making process concerning the allocations of remittances.
     90% stated that they like to offer specific advice on how to use the remittance proceeds. They feel they have learned a lot through the migration process and labor force participation in a new environment.
     51% stated that they also like to offer general advice, in any and every category that enters the conversation. 49% stated that they sometimes give general advice. They seem to think that specific advice produces better results.

EVALUATION OF THE EFFICIENT USE OF RESOURCES

              95% of the respondents opined that the proceeds of the remittances are administered wisely, properly, and efficiently. The remainder, namely 5%, stated that they are being used properly, but not extensively enough. Expenditures are allocated toward necessities and urgencies, mainly.
     To summarize, the remittance dispatchers’ perception on how much knowledge they have concerning the household income allocation decisions is: 62% stated that they know almost everything about the process; 38% stated they know a lot; and none stated that they know very little or nothing at all.

ACTUAL ALLOCATION PATTERNS

     Remittance senders were presented with the following hypothetical situation. If they had just sent $200 to their family back home, under normal and ordinary circumstances, they were asked to indicate whether the family would normally allocate money to the following categories:

• Daily household consumption (food, utilities)
• Rental housing or contribution to rent
• Transportation
• Clothing and shoes
• Doctors and health
• Savings for an emergency
• Investments for a business
• Investments for a family home and land
• Education
• Domestic appliances
• Private transportation
• Celebrations, festivals, parties
• Presents for special occasions
• Vacations
• Payment of debts
• Trip to see family or relocate
• Charity or religious
• To assist a neighbor or friend
• Expenditures for home improvement
• Some other category

     It is important to recognize that $200 in many LAC represents enough income and spending power to cover the normal expenditures of a very low income household. 100% of all the respondents studied and analyzed all the categories presented above.
     Three general categories of responses emerged:
                     Group I:      Very conservative and focused on one area
                    Group II:     Relatively targeted on six areas or less
                    Group III:    Extensive and far-reaching into all 20 areas

Reaffirmation with a Hypothetical Budget

     Respondents were asked to immerse themselves in the following hypothetical situation. If their family in Latin America had just received $200 in remittances from them in the USA, and they were getting ready to use it under normal and predictable circumstances, how would it be allocated? The remittance funds would be used in the 20 categories presented earlier.
Group I: 17% of respondents indicated that the recipient family actually spends 100% of the remittance funds on medicine, medical care, hospital, laboratory work, and health care costs in general.
Group II: 34% of the respondents indicated that the recipient family actually spends 100% on the following six categories, mainly:
                         

1. Household Expenditures..........................................       25.0%
2. Healthcare .............................................................       15.0%
3. Transportation – Public ...........................................        5.0%
4. Transportation – Private and Collective.......................        5.5%
5. Education...............................................................        2.5%
6. Clothing and Shoes..................................................      30.0%
7. Savings....................................................................      17.0%

          Total percent of $200..................................................    100.0%

1. When taking a closer look at the percentage distribution of the expenditure categories listed above, there are logical reasons and additional information offered by the respondents:
• Under Household Expenditures, funds were spent on food, telephone services, and fuel. Fuel could be in the form of electricity, wood, or gas.
• Almost nothing was spent on potable water, cable, or Internet services.
• Locally grown and produced food is inexpensive, unprocessed, and families eat at home.
• Expenditures on restaurant food are negligible.
2. In the Healthcare category, the biggest component is medicines. The large percentage is attributable to the dollarization of pharmaceutical products as well as previously unattended or poorly attended health care issues.
3. In the Public Transportation category, the main modes of transportation used by recipients are buses and collective taxis.
4. In the Private Transportation category, the main modes of transportation used by recipients are mini-trucks and bigger trucks. These are owned by recipients, friends, neighbors, or owner-operators. Pooling rides and charging a fee is customary.
5. Under Education, which is mostly Public Education and free of charge, recipients checked off the books and supplies; and the uniforms category.
6. Clothing and shoes occupy an extraordinarily large proportion of expenditures. This is attributable to the fact that these items are usually imported, and subject to the dollarization phenomenon. Furthermore, this includes personal and work clothes. In addition, protective clothes in agriculture and industry are necessary. Presentation in clerical positions is a top priority.
7. Savings are commonly deposited in banks only, as opposed to co-ops, credit units, or savings banks. They are intended for investments or emergencies.

• The largest category that stands out in the previous table is Debt Payments. Recipients seem to occupy rental units more frequently in this group, indicating the absence of mortgage-free home ownership or land ownership.
• A large percentage is making payments on a home or land.

Correlations

There exist no significant differences among the three groups in terms of family composition, marital status, number of family members, age, education, or rural/urban type of environment. The only difference that exists among the three groups is their remittance sender. In particularly, the length of time the sender has lived in the USA is positively correlated with increased focus.
Group I:

• Totally focused expenditures are strongly correlated with remittance senders’ length of residence in the USA of over 10 years.

Group II:

• Relatively targeted expenditures are strongly correlated with remittance senders’ length of residence in the USA of over 5 years but fewer than 10 years.

Group III:

• Extensive reach expenditures correspond with length of residence of under 5 years.

General Reasons for Patterns
     Remittance senders were asked to reflect on the reasons behind the household funds allocation process. They seemed to think that a combination of factors accounts for these expenditures patterns. 96% agreed that economic urgency is a factor, 98% agreed that necessity definitely plays a role, 18% stated that family members are accustomed to a certain lifestyle, 87% trace it back to habits and fewer than 4% believe that new ideas and innovations are driving forces for expenditures. Other more specific reasons given include the customary cultivation of crops; the purchase of farming equipment, and various expenditures related to self-employment.
     Life-cycle theories of household consumption patterns are a broadly researched and discussed topic in labor economics. The Family Life-Cycle Hypothesis states that the level, the type, and the mix of consumption expenditures are a function of the life-cycle stage of the household. In this research project, the life-cycle stages also can be re-interpreted to signify the various stages of introduction of household product and service innovations. This is labeled as the Household Products Life-Cycle Hypothesis. Based on this concept of evolution of household expenditures patterns, as time progresses and needs are satisfied, it would be reasonable to assume that remittance recipients experience an accelerated life-cycle of household consumption, as compared to previous years, reflecting very few changes and low income.
Past, Present, and Future Patterns
     Respondents were asked to reflect on whether, as time progresses, there are indications that the use of remittance money by their families in Latin America is changing. 50% indicated that patterns are definitely and noticeably changing, 40% indicated patterns are definitely not being affected, and 10% indicated that patterns are slowly but surely changing. This generated a bimodal distribution with few observations in the middle.

EXTRAORDINARY REMITTANCES

     Sometimes the respondents are asked to send extraordinary remittances. In those occasions, the main reasons that remittance recipients have for additional funds can be summarized below.

• Emergencies related to chronic illness or unexpected health problems
• Celebrations of a successful completion of a high school or university study
• Celebrations – Birthdays and weddings or anniversaries

59% of remittance senders sent extraordinary remittances. 41% of this group did not send extraordinary remittances.

DESIRED ALLOCATION PATTERNS

     First and foremost, necessity and urgency, and, secondarily, habits, and modest improvements in lifestyles are the driving forces behind the actual allocation of household remittances. The actual allocation process and its evolving patterns over time were discussed above.
     In contrast to the established expenditures patterns, based on urgency and necessity, habits and modest improvements in lifestyles, the respondents were asked to generate their own index of spending priorities. They were asked to rank the usage of remittances according to their perceived importance and their personal values. This ranking process reflects the preferences, personal value judgments and priorities of the remittance senders; and is—or is encouraged to be—totally independent of actual expenditures patterns of LAC households. It reflects a normative ranking of how expenditures should be allocated in a hypothetical world, viewed as efficient by the remittance senders. Respondents were given the opportunity to rank all twenty expenditures categories provided, as essential, important, or minor, based on the experience and knowledge that they had acquired after leaving their country of origin.
     The respondents indicated that they feel very comfortable placing expenditures in the following three groups: Essential, Important, Minor
     A somewhat unexpected finding in this research endeavor is that there exists a very strong correlation between the number of years that the respondents had lived in the United States and their Personal Ranking Index of expenditures into Essential, Important, and Minor categories. The preliminary Hypothesis of Evolution of Priorities was complemented with a Hypothesis of Progressive Focus. The totally unexpected part of the findings consists of the emergence of four distinct ranking patterns, three of which show evolution and progression in degrees of focus, and one of which shows a revolution and radical departure from established behavioral patterns.
     The first three ranking patterns were generated by families living in the U.S. less than 5 years, more than 5 years, and more than 10 years. The fourth and radically different ranking pattern was generated by younger respondents who had moved to the U.S. during childhood years and had been exposed to the American Educational System and American way of life at an early age.
USA Group I
     Respondents who indicated that they had resided in the United States for less than 5 years showed:

• Mixed results and a flat distribution of funds.
• Expenditures allocated in all categories
• No noticeable differentiation of Important, Essential, and Minor categories
• Extensive but low-level allocation patterns
• A desire to meet all needs
• Lower level of results and minor impact
• The patterns in the USA Personal Ranking Index do not differ from actual expenditures patterns of LAC households
• Absolutely no focus
• The commitment to help relatives is strong.

USA Group II
     Respondents who indicated that they had resided in the United States for more than five years but fewer than 10 years showed that:

• Definite differentiation patterns regarding priorities with respect to Essential, Important, and Minor categories begin to emerge.
• The patterns in their USA Personal Ranking Index do not differ from the actual expenditures patterns of LAC households.
• There is no reversal of priorities.
• There is evidence of significantly more focus.
• The commitment to help relatives continues.

USA Group III
     Respondents who indicated that they had resided in the United States for more than 10 years showed that:

• Again, the patterns in their USA Personal Ranking Index do not differ from actual expenditures patterns of LAC households.
• There is no reversal of priorities
• There is evidence of extreme and well-thought through focus.
• The ever-present commitment to help relatives remains intact.

USA Group IV
     The fourth and systematically different category belongs to the New Americans who are foreign-born and migrated to the USA as children.

• Their USA Personal Ranking Index radically differs not only from actual LAC expenditures but from the USA Personal Ranking Index generated by the other three groups of remittance dispatchers.
• This cohort views the old LAC family basket of basic necessities such as food, shelter, clothing and shoes, utilities, public transportation, and others as a given.
• They are matter-of-fact and routine expenditures that are taken care of in a matter-of-fact way. They are not considered important enough to even discuss. They are considered givens.
• Their priorities reside in achieving and maintaining a high quality of life, which is obtained with amenities, and services such as:
• Health care and health maintenance. This includes preventive health, fitness, and nutrition.
• Educational achievement. This includes post-secondary education for over 75%.
• Travel expenditures to visit family, or to relocate in order to achieve a higher rate of return on educational attainments.
• Travel becomes important to maintain family connections, but not for vacations that provide personal gratification away from family.
• Assistance to friends and neighbors in need. This, in a way, is a reflection of the spirit of generosity embedded in American values and culture.
• Payment of debts. Respondents find it necessary and acceptable to borrow money for personal transportation and educational purposes.

Comparative Analysis of Actual and Desired Allocation Patterns

     When comparing the actual and desired allocation patterns, it becomes clear that the two cohorts are very similar, except for USA Group IV. What follows is a comparison table:
(See Table 1)

Areas of Impact

     In addition to providing information about their country or region of origin, respondents were also asked to describe the physical environment in which they lived. Fewer than 40% stem from a rural environment, and send remittances back to their environment. More than 50% migrated from small cities or towns, and remit to this environment. Fewer than 10% left a large city, and remit to this environment.

SECTION V - SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS
SUMMARY OF THE INVESTIGATION PROCESS OF REMITTANCE PATTERNS

     The primary objective of this project was to gain knowledge on the principal factors influencing the household income allocation decisions made by remittance recipients in LAC. The secondary purpose was to understand the nature of the communications flow between remittance dispatchers and recipients, to gain insight concerning the evaluation of the efficient use of resources by recipients, to document the actual versus prescribed allocation of remittance funds, and to shed light on possible past, present, and future improvements in household well-being.
     A standard household demand function was invoked. It was reworked to acknowledge the significance of remittances, information flows, and quality-of-life variables in the household income allocation process. This function also incorporates the number of beneficiaries, the duration of residence of remittance senders, the family income allocation history, and the geographic region where beneficiaries spend the remittances.
     The author developed a survey on the impact of remittances on household income allocation decisions in LAC. It was conducted on a group of LAC immigrants residing in the Middle Tennessee area.

PRINCIPAL FINDINGS OF THIS RESEARCH PAPER

• Over 80% of the respondents are from Central America.
• Over one-half of the foreign-born families had lived less than five years in the USA
• Respondents send about eight to twelve remittances per year, on a normal basis.
• Respondents send as many as four remittances per year, on an extraordinary basis.
• Remittance dispatchers and recipients tend to agree on the allocation of funds over 98% of the time.
• On average, three to four family members benefit from the remittances.
• 98% of the recipients initiate the process of sharing information.
• 100% of the senders ask about the allocation of funds, always, or sometimes.
• 100% of the senders are very interested in what happens back home and in how the funds are applied.
• 95% of the respondents opined that the funds are being administered wisely, properly, and efficiently.
• Concerning the allocation of normal remittance funds, three general categories of responses emerged:

LAC Group I:    Very conservative and focused on one area
LAC Group I:    17% focused (100% on 1 area)
LAC Group II:   34% relatively focused (100% on 6 areas)
LAC Group III: 49% extensive and far-reaching (100% on 20 areas)

• Household income allocation patterns at the subsistence level are very similar across LAC.
• Among households in the extensive, far-reaching category, the largest expense is Debt Payment.
• These households have a tendency to occupy rental housing. They do not indicate mortgage-free home ownership. They are making payments on land or a house.
• There exist no statistically significant differences among the three remittance receiving groups, in terms of demographic and socio-economic characteristics. The only difference among them is the length of time “their own” remittance sender has lived in the USA

CONCLUSIONS ABOUT THE ELUSIVE WORLD OF REMITTANCES

     In conclusion, remittance dispatchers and recipients alike perceive the rate of return of remittance allocations to be extremely high. The fundamental reason for undergoing the occupational and geographical mobility process is to experience the rewards of optimum remittance allocation decisions. This is a joint decision-making process facilitated by an open and honest information flow.

RECOMMENDATIONS

     In summary, one possible outcome of this research project was to generate a mechanism whereby policy makers might better understand some of the underlying reasons for international migration and remittances. This understanding could assist in the development of guidelines and recommendations regarding how to engage in targeted assistance to Latin American and Caribbean countries. Targeted assistance could focus on remittance market improvements, i.e., money transfer companies, the banking sector, and the array of financial services they can provide. Targeted assistance might also focus on financial education for recipient households, i.e., the formulation of immediate, intermediate, and long-term financial goals, alternatives and constraints.

Table 1

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