Freund, CarolineSpatafora, Nikola2012-03-302012-03-302008Journal of Development Economics03043878https://hdl.handle.net/10986/5754Recorded workers' remittances to developing countries reached $167 billion in 2005, bringing increasing attention to these flows as a potential tool for development. In this paper, we explore the determinants of remittances and their associated transaction costs. We find that recorded remittances depend positively on the stock of migrants and negatively on transfer costs and exchange rate restrictions. In turn, transfer costs are lower when financial systems are more developed and exchange rates less volatile. The negative impact of transactions costs on remittances suggests that migrants either refrain from sending money home or else remit through informal channels when costs are high. We provide evidence from household surveys supportive of a sizeable informal sector.ENInternational InvestmentLong-term Capital Movements F210International Migration F220Geographic Labor MobilityImmigrant Workers J610International Linkages to DevelopmentRole of International Organizations O190Journal ArticleWorld Bank