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The theoretical and empirical literature generally regards international migration as producing a cycle of dependency and stunted development in sending communities. Most migrants' earnings are spent on consumption; few funds are channeled into productive investment. We argue that this view is misleading because it ignores the conditions under which productive investment is likely to be possible and profitable. We analyze the determinants of migrants' savings and remittance decisions, using variables defined at the individual, household, community, and macroeconomic levels. We identify the conditions under which U.S. earnings are repatriated to Mexico as remittances and savings, and indicate the factors leading to their productive investment.
Durand et al. (Wed,) studied this question.