Remit or reunify? U.S. immigrant parents, remittances, and the sponsorship of children

This paper explores the relationship between the sponsorship by an immigrant of family members - family reunification - and remittances provided to family members using data from both rounds of the New Immigrant Survey. In this preliminary exploration, we assess to what extent the two behaviors are linked, using a simple model of the household to guide our analysis in which an altruistic family selects who among its family members to sponsor and to whom to provide transfers. Our findings on transfers conform to those from most of the literature on transfers - transfers flow from higher-wage migrants to lower income recipients. We find that among immigrant’s children, the less educated who are resident in low wage (low prices of skill) countries are more likely to receive transfers. However, our estimates on sponsorship indicate that parents choose to sponsor those who are higher-skilled and living in countries where skills are less rewarded. Thus we find that family reunification is positively selective on skill and negatively selective on the home-country skill price, while remittance behavior is negatively selective on both skill and the price of skill in the origin country.