471. Sharing Norm Pressures and Community Remittances: Evidence from a Natural Disaster in the Pacific Islands

Richard P.C Brown, Gareth Leeves and Prabha Prayaga, School of Economics Discussion Paper No. 471 October 2012, School of Economics, The University of Queensland. Australia.

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Abstract

Migrants are often subject to social pressures to remit beyond their own households, to share the benefits of migration with the wider community in their home country; these are ‘community remittances’. We hypothesize that community sharing norm pressures are stronger in locations with more extensive home-community networks. We also postulate that the responsiveness of remittances to sharing pressures is subject to diminishing returns, attributable to a donor fatigue effect. Using customized survey data from three Polynesian migrant groups in metropolitan and regional Australia, we estimate double-hurdle regression models of community remittances. To identify the effects of sharing norm pressures we exploit an exogenous (cyclone) shock to home country incomes affecting one sub-group. We find strong evidence in support of the postulated responsiveness of community remittances to location-related differences in sharing norm pressures, and the presence of a donor fatigue effect. The policy implications are discussed.