Remittance Responses to Temporary Discounts: A Field Experiment among Central American Migrants

NBER Working Paper No. 20522

Issued in September 2014

NBER Program(s):Development Economics



We study the impacts on remittances of offering migrants temporary discounts on remittance transaction fees. We randomly assigned migrants from El Salvador and Guatemala 10-week remittance transaction fee discounts, and assess impacts using administrative transaction data and a post-experiment survey. Temporary discounts lead to substantial increases in the number of transactions and total amount remitted during the discount period. Surprisingly, these increases persist up to 20 weeks after expiration of the discount. We find no evidence that the discounts cause migrants to shift remittances from other remittance channels, or to send remittances on behalf of other migrants. These findings are consistent with naïveté on the part of migrants regarding remittance recipients' reference-dependent preferences.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w20522

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