The volatility effect of diaspora's location

Éric Rougier , Nicolas Yol (1)

1 OFCE - Observatoire français des conjonctures économiques (Sciences Po)

Remittances can transmit volatility from host to home countries for some common patterns of diaspora's geographical distribution. In a migration portfolio model, the overall risk of volatility of any set of diaspora location is decomposed into a contagion and a concentration risks: a diaspora located in more volatile destinations induces a higher contagion risk, while a diaspora located in few destination countries increases the concentration risk. A series of estimations on a large panel of developing countries over 1995–2015 provide evidence for these two risks. Estimation of a structural model confirms that the geography of diaspora has an indirect impact on the origin country's aggregate instability through remittances.

Keywords: diaspora; fluctuations; income volatility; migration; portfolio choice; remittances

Domains: Humanities and Social Sciences; Economics and Finance

Éric Rougier, Nicolas Yol. The volatility effect of diaspora's location. The World Economy, 2018, 6 (42), pp.1796-1827. ⟨10.1111/twec.12773⟩. ⟨hal-03613528⟩