Remittances and Economic Evaluations

Abstract

Abstract This chapter examines how remittances, as well as fluctuations in their volume, shape households’ pocketbook evaluations and perceptions of national economic conditions. The chapter explores two central claims: first, that remitted income may influence recipients’ assessments of their pocketbooks and of the national economy; second, that voters’ economic perceptions are also responsive to changes in remittances. Negative shocks to remittances, by harming household income, consumption, and saving patterns may dampen economic optimism. In contrast, positive shocks to remitted income, by heightening household consumption and economic security, may bolster economic optimism. This chapter tests expectations using rich, individual-level data collected across Central-Eastern Europe, the Caucasus, and Central Asia. Leveraging evidence from the COVID-19 pandemic, it also demonstrates the important role that remittances played in enabling households to smooth consumption and bolster economic optimism.