Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household...

Using a recent Spanish database, we show that remittances respond to cross country differences in portfolio values. This behavior suggests that immigrants are sophisticated economic optimizers who take advantage of opportunities to invest trans-nationally given the networks that immigrants are...