International Remittances and Private Inter-household Transfers: Exploring the Links∗

We investigate the effect of remittances from migrated family members on informal inter-household transfers- an issue that has received limited attention in the literature. Using rich panel data from urban Ethiopia, we show that receiving international remittances significantly increases the value of private domestic inter-household transfers, whereas receiving domestic remittances does not have any effect. We also show that the transfers sent respond to shocks to a great extent. Our results provide new evidence on the trickle-down effects of interna-tional remittances, effects important to consider when analyzing the impact of international remittances on household outcomes in recipient countries. JEL Classification: D12, O12, O17, O5