The volatility effect of diaspora’s location
Résumé
Remittances can transmit volatility from host to home countries for some common patterns of diaspora's geographical distribution. In a migration portfolio model, the overall risk of volatility of any set of diaspora location is decomposed into a contagion and a concentration risks: a diaspora located in more volatile destinations induces a higher contagion risk, while a diaspora located in few destination countries increases the concentration risk. A series of estimations on a large panel of developing countries over 1995–2015 provide evidence for these two risks. Estimation of a structural model confirms that the geography of diaspora has an indirect impact on the origin country's aggregate instability through remittances.