Ethnicity, Language and Immigration Thematic Series
Study on International Money Transfers from Canada

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by Zacharie Tsala Dimbuene and Martin Turcotte

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1. Introduction

Context

Remittance flows to low- and middle-income regions are an important source of external funding for many developing countries, at both the macro- and microeconomic levels. At the macroeconomic level, it was estimated that, on average, remittances account for 27% of gross domestic product (GDP) in some developing countries.^Note At the microeconomic level, remittances play an important role in reducing poverty, paying for food and education and supporting community development.

Worldwide, the World Bank estimates that people pay fees of about 7% to send US$200 abroad.^Note Remittance fees can vary, sometimes substantially, by region and transfer methods. Therefore, reducing remittance fees has become a strategic focus for multilateral development within the “5x5 objective” framework.^Note According to the World Bank, this initiative could keep up to US$16 billion in the pockets of migrants who send money back home.

In an effort to align with international initiatives, the Government of Canada announced in 2015 a series of provisions to reduce the cost of remittances.^Note More recently, the Federal Government reiterated its intent to work closely with the provincial and territorial governments to improve regulation of the remittance industry in the country so that residents of Canada who send money abroad are not charged exorbitant fees.^Note Against this background, the Study on International Money Transfers targeting residents of Canada born in Official Development Assistance (ODA)-eligible countries was designed to collect data on international money transfers from Canada and on the characteristics of those who transfer money, and to identify the needs of Canadian residents born in an ODA-eligible country who send money abroad.

Objectives of the report

This report highlights key findings of the Study on International Money Transfers, and it answers the following questions.

• Among Canadian residents born in a country eligible for Official Development Assistance,^Note how many and what proportion send money outside Canada? How much money did they send in 2017, in total and on average?
• What are the characteristics of people who remit (ODA birth region, sex, age, socioeconomic characteristics)? Indeed, studies have shown that a number of factors can influence the propensity to remit, including individual, household, and contextual characteristics.^Note
• Which methods are used most often to send money abroad? What is the fee for transferring money abroad, and how does it vary with the method used to send money?

The report also examines gender differences in remittances. A number of studies have explored and compared the remittance patterns of men and women. However, findings are mixed. Some studies have found significant differences in remittance patterns between men and women,^Note while others have reported no differences.^Note

Furthermore, previous research pointed out national and regional differences in remittance behaviours.^Note The report accounts for this dimension by analyzing remittance behaviours by birth region of respondents. The report groups country of birth into eight regions: the Americas, Eastern Europe and Southern Europe, Sub-Saharan Africa^Note , Northern Africa, West Central Asia and the Middle East, Eastern Asia, Southeast Asia and Oceania, and Southern Asia.^Note It is important to remember that only people born in ODA-eligible countries are included in the survey and these regions. For example, Canadian residents born in the United States are not included in the study because the United States is not an ODA-eligible country.

2. Survey methodology, data sources, methods and definitions

Data sources

This report uses data from the 2018 Study on International Money Transfers (SIMT). The survey was conducted by Statistics Canada on behalf of Global Affairs Canada. The survey provides reliable estimates of remittance flows by naturalized Canadians, landed immigrants and temporary residents born in ODA-eligible countries aged 18 years and over who sent money from Canada. Furthermore, the survey provides a comprehensive look into their remittance behaviours and their needs to improve remittance experiences.

ODA-eligible countries consist of all low and middle income countries based on gross national income (GNI) per capita as published by the World Bank. All of the Least Developed Countries (LDCs), as defined by the United Nations (UN), are included in the ODA-eligible country list. Because the classification is dynamic and may vary from a year to another, the year 2017 is the reference year in the survey.^Note

The temporary residents covered by the survey are refugee claimants and persons with a work permit valid anytime in 2017 and at least until April 1, 2018. Residents of the ten provinces are covered, while residents of the three territories are excluded. Institutionalized persons are excluded as well.

The survey frame was a person-based list frame, constructed from two sources. The first source was the 2016 longform Census which was used to cover naturalized Canadians and landed immigrants. The second source was administrative files from Immigration, Refugees and Citizenship Canada (IRCC) which were used to cover immigrants that landed after the 2016 Census, refugee claimants and temporary residents with a valid work permit.

SIMT collected information from 23,000 respondents on socio-demographics, remittance behaviours and needs, including frequency of remitting, knowledge and utilization of methods used to send money abroad, total amount remitted in 2017, sending costs, remittance destinations, characteristics of recipients, and satisfaction on the overall process of remitting. For more details on the survey, see Study on International Money Transfers.

Definitions and Methods

Remitter: A person who sent money abroad in 2017. Respondents were asked whether they (1) sent money to relatives or friends living outside Canada in 2017; or (2) had money hand-carried by themselves or someone else, to relatives or friends living outside Canada in 2017. These respondents are referred to as remitters in 2017.

Remittances: The money immigrants send to relatives or friends in the country of origin or another country. The methodology on how to estimate remittance flows are a subject of debate in the literature. In this survey, data were collected at the individual level which also constitutes the unit of analysis. In this report, remittances are personal money that a respondent sent abroad in 2017; they exclude the money sent abroad on behalf of other people such as relatives or friends.

The World Bank has been a leading institution to provide with facts on remittances and the costs of sending money abroad. To estimate aggregate volumes remittances and bilateral remittances, the World Bank uses the International Monetary Fund (IMF)’s database on remittance inflows and outflows Balance of Payments (BoP) database. IMF introduced a new definition of personal remittances in 2009.^Note Personal remittances which come from BoP include (1) compensation of employees and (2) personal transfers. A third component has been considered in estimating remittance flows, the “capital transfers between households”; this latter is more difficult to obtain and is missing for almost all countries. Besides the BoP database, aggregate volumes of remittances can also be estimated using household surveys.^Note Finally, bilateral remittances—or remittances flows between two specific countries can be estimated. The caveat about the methodology developed so far to estimate bilateral remittances require data from both countries, which is in practice very difficult.^Note Due to differences in methodology, figures from SIMT and the World Bank are not comparable.

Sending cost during last money transfer in 2017: The fee paid during the last money transfer. Respondents were asked “The last time you sent money to relatives or friends living abroad in 2017, was there a fee to send the money?” and “how much was the fee?” To estimate the fee paid during the last money transfer, either as averages or a percentage of the amount remitted, only valid amounts greater than zero were included in the computation.

Birth and destination region: Birth region corresponds to the geographical region of the ODA-eligible country where the remitter was born, while destination region refers to the region where money was sent in 2017. The birth and destination regions were defined using either a classification by geography, or a classification based on the gross national income (GNI).

In the SIMT, respondents were asked questions about their country of birth. This information was used to define broader birth regions. That includes (1) Americas; (2) Eastern Europe and Southern Europe; (3) Sub-Saharan Africa^Note ; (4) Northern Africa; (5) West Central Asia and the Middle East; (6) Eastern Asia; (7) Southeast Asia and Oceania; and (8) Southern Asia. In a similar way, the destination regions were defined using two sets of information. First, respondents were asked “In 2017, to what country did you send money most often?” Second, respondents were asked “In 2017, did you send money to relatives or friends living outside Canada in any countries other [than that identified above]?” From these two pieces of information, it was possible to define the “destination region” which includes categories similar to birth region, with an additional category (9) for all non ODA-eligible countries. Another criterion “level of economic development” was used to define both birth and destination regions of remittances resulting into three categories: (1) least developed countries; (2) low- and middle-income countries; (3) upper middle-income countries; and additional category (4) high-income countries for destination region of remittances. This latter category is the same to non ODA-eligible countries in the first classification.

Analyses and quality of the estimates

The report is based on descriptive results with an emphasis on differences by gender, region of birth, and region of destination. For the quality of estimates, the lower and upper bounds of the confidence intervals are presented. Confidence intervals should be interpreted as follows: If the survey were repeated many times, then 95% of the time (or 19 times out of 20), the confidence interval would cover the true population value.

3. Findings

Almost four in ten residents of Canada born in ODA-eligible countries sent money abroad in 2017

In 2017, 37% of Canadian residents born in ODA-eligible countries sent money to relatives or friends living in another country.^Note That money was sent by formal methods (through a bank or online money transfer) or simply hand-carried by the person or someone else. Men were slightly more likely (38%) to remit than women (36%).^Note

The total amount sent abroad was $ 5.2 billion in 2017. Of that amount, $2.9 billion was sent by men and $2.3 billion by women. As a proportion, this translates into 56% for men and 44% by women.

On average, these individuals remitted $2,855 to relatives or friends. Men sent more ($3,250) than women ($2,470) on average.

As found in previous studies,^Note the propensity to remit varied across birth regions (Chart 1). In 2017, the percentage of Canadian residents born in ODA-eligible countries who sent money to relatives or friends in another country varied from 11% for those born in Eastern Asia to 57% for those born in Southeast Asia and Oceania. According to some researchers, these variations may partly be due to cultural differences.^Note Also in some countries, like the Philippines, the government actively promotes the training and the deployment of young adults to work abroad and send back remittances –especially women in the case of the Philippines.^Note In Canada for example, a very large proportion of immigrants admitted under the live-in caregiver program are Filipino women.

Among Canadian residents born in sub-Saharan Africa, West Central Asia and the Middle East, Eastern Asia and Southern Asia, men were more likely to send money abroad than women. For example, 43% of men born in Southern Asia sent money to relatives or friends living in another country in 2017, compared with 28% of women. This finding reflects the general patterns for the total population of Canadian residents born in ODA-eligible countries.

In contrast, in Southeast Asia and Oceania, women (61%) were more likely to send money than men (51%).

The average amount sent also varied by region of birth (Chart 2). However, the regions with the highest average amounts were not necessarily the same as those with the highest proportions of those who remitted. For example, 11% of people born in Eastern Asia sent money outside Canada and the average amount was $4,755. In contrast, 46% of people born in the Americas sent money to relatives and friends, but the average amount was $1,825.

The total amount remitted also varied significantly by birth region (Chart 3).

Canadian residents born in least developed countries most likely to remit, but they remit less

Since remittances can be seen as a poverty reduction strategy, the level of economic development in the country of origin may be associated with the likelihood to remit. In 2017, residents from upper-middle income countries were less likely to send money than those from least developed countries or lower-middle-income countries (Chart 1). A quarter of people (24%) born in upper-middle income countries sent money abroad—half the proportion of remittances of those born in least-developed countries (49%) or lower-middle income countries (45%).

The difference in the propensity to remit was small between men and women born in upper-middle income countries. However, it was significant among those born in least developed countries where men were more likely to remit than women, with a difference of 5 percentage points.

In terms of amounts remitted in 2017, people born in least developed countries sent on average $2,265. That was less than those born in lower-middle income countries ($2,970) or upper-middle income countries ($2,910). In the three categories of countries, men sent more than women on average. For example, while men born in least developed countries sent on average $2,690, their female counterparts sent $1,810.

Residents who arrived more recently more likely to remit

Another factor associated with the remittance behaviours of people born abroad is how long they have lived in the host country. Previous research has produced mixed results. Some studies have found that time since migration was negatively associated with remittances,^Note while others found no significant effect.^Note The main explanation is that remittance dynamics, like any other temporal pattern, depend on the specific migratory and social context. Therefore, there is no reason to expect a consistent pattern.^Note

Generally speaking, the likelihood to remit was higher among Canadian residents who arrived recently in the country (Chart 4). For example, the likelihood to remit for people born in ODA-eligible countries located in the Americas ranged from 31% for periods before 1980 to 53% for the most recent period. Among people born in ODA-eligible sub-Saharan African countries who came to Canada prior to 1980, 22% transferred money in 2017, compared with 61% of those who were admitted in Canada between 2010 and 2017. Exceptions to this general pattern were observed for Eastern Asia and for West Central Asia and the Middle-East.

A number of explanations can be drawn from the literature.^Note First, the number of potential recipients is likely to decline over time through death or chain migration, such as family reunification. Second, social ties with communities in home country tend to fade over time, and as a result, so does the likelihood to send money abroad. Consequently, recent immigrants with stronger family ties or friendships in their home country are more likely to remit than older cohorts originating from the same birth region. Thirdly, some of the differences in remittance patterns may reflect the changing socioeconomic characteristics, over decades, in migration waves.

Individual and household characteristics of Canadian residents born in ODA-eligible countries associated with the likelihood to send money abroad

There is vast literature on the factors associated with the likelihood for immigrants to send money back home and the amount they send.^Note Table 1 presents the proportion of people who sent money in 2017, by several characteristics. Table 2 presents the average amounts sent for the same characteristics.

Younger and older peoples born in ODA-eligible countries are less likely to remit

As illustrated in previous studies^Note , age is associated with the likelihood of remitting. More precisely, the proportion of people who sent a remittance follows a bell-shaped curve in regards to age: it is lower at younger ages, increases and peaks in middle age ranges, and decreases at older ages. For example, 28% of those aged 18 to 29 years sent money abroad in 2017, a proportion that rose to a high of 45% among people aged 40 to 49 years, and then declined to 21% among people aged 70 and older. The same trend was observed among both men and women.

While the average amount sent was lower among younger people ($2,265), it did not vary substantially by age group (Table 2). In terms of gender differences by age, the average amount sent by men was higher than for women in all age groups (Table 2).

The proportion of people who remitted in 2017 was higher among those employed full-time

Employment status is also an important factor affecting remittance behaviour because it correlates with income. In 2017, among Canadian residents born in ODA-eligible countries, 46% of those who were employed full-time sent money abroad. The corresponding figures were 32% for those employed part-time and 22% for the unemployed.

Individuals employed full-time sent $3,135 on average. A comparison by sex shows that men employed full-time transferred on average $3,465, while women employed full-time sent $2,720, a difference of $745.

Among those who worked part-time, the average amount sent in 2017 was $2,300. Within this category, men remitted on average $2,445 compared with $2,235 for women. Those who were not employed sent an average amount of $2,065. Again, men remitted on average more ($2,285) than women ($1,960).   

Above annual personal income of $20,000, the propensity to remit is weakly associated with the income level

Personal income helps to determine an individual’s capacity to remit. However, past studies have indicated that higher income may be associated with financial burdens such as mortgages, car loans and other expenses related to a certain living standard. As a result, a higher income may not necessarily be indicative of the ability to remit.^Note

In 2017, the lowest proportion of individuals who sent money were in the lowest income bracket (26%), while the highest proportion had an income between $30,000 and $49,999 (46%).

Among people with a personal income of less than $20,000, women were more likely than men to send money. In the other personal income brackets, the proportion of men and women who sent money was not significantly different.

In 2017, people with a personal income of $90,000 or more transferred the highest average amount ($5,735), followed by individuals with an income of $70,000 to $89,999, who sent on average $4,230.

Among individuals with an income of $90,000 or more, men sent more money than women ($6,190 versus $4,675), a difference of $1,515. However, there were no significant differences between men and women in other income brackets. In other words, when personal income was taken into account, men and women sent similar amounts of money to relatives and friends living abroad.

Southeast Asia and Oceania: top destination of remittances from Canada in 2017

Researchers have been interested in the volume and geography of remittances, but data sources are sometimes limited in that respect.^Note Therefore, in the literature, researchers make the implicit assumption that migrants send money back to their country of origin in order to help relatives or friends. In reality, migrants can also send money to places that are not their country or region of birth—including high-income countries (OECD countries and others).

Data from the Study on International Money Transfers are used to estimate the average and total amounts of money sent to relatives or friends by destination, including all countries not eligible for ODA.

In many ways, the assumption that the region of birth is closely associated with the destination of remittances is correct.^Note Therefore, the results by destination are somewhat similar to those by country of origin. The main difference between the two sets of results is that the destination includes countries not eligible for ODA.

In 2017, remitters sent on average $3,550 to countries not eligible for Official Development Assistance ($4,165 for men and $2,925 for women) (Chart 5). Among the non-ODA countries, the United States was the top receiving country.

In 2017, the largest amounts sent on average were sent to Eastern Asia (Chart 5).

Men generally send more money than women. For example, men transferred on average $2,805 to sub-Saharan African countries, compared to $1,945 on average for women. As well, while women sent on average $2,310 to a Southern Asian country, their male counterparts sent an average of $3,300. However, women sent on average about the same amount as men in Southeast Asia and Oceania.

Overall, in 2017, $1.4 billion in remittance flows from Canada, or 27% of the total, went to Southeast Asia and Oceania (Table 3). Women accounted for the majority of that amount ($906 million), while men remitted a total of $512 million. Women born in the Philippines accounted for a large share of the money remitted to Southeast Asia and Oceania ($767 million of the $906 million sent by women to Southeast Asia and the Oceania).

Southern Asia received $1.2 billion in 2017, corresponding to 23% of the remittance flows. Eastern Europe and Southern Europe, Northern Africa, West Central Asia and the Middle East received the smallest share with 2%, 3%, and 4%, respectively.

More than half of remittance flows went to lower-middle income countries

When destination regions are defined according to the level of economic development, findings show that $2.8 billion (55% of remittance flows from Canada) went to lower-middle income countries in 2017, followed by upper-middle income countries at $1.1 billion (21% of total remittance flows from Canada) and high-income countries at $761 million (15% of total remittance flows from Canada) (Table 3).

The least developed countries, which in theory need remittances the most, received only $479 million, or 9% of all remittances.

These numbers partly reflect the birthplaces of the survey’s target population. Among Canadian residents born in ODA-eligible countries, only 11% were born in least developed countries, while 50% were born in lower-middle income countries and 40% were born in upper-middle income countries.

Socioeconomic and political factors may also help to explain why the least-developed countries receive a relatively small proportion of total remittance flows. For example, least developed countries may have poor infrastructure, and the social and political context may not allow migrants to send money through official channels such as money transfer providers. One might also think of the currency valuation in the least developed countries; in practice a small amount remitted in least developed countries can solve many problems compared with more advanced societies.  

Top five corridors in 2017: Canada to the Philippines, India, the United States, China and Pakistan

While the previous section analyzed the destination of remittance flows from Canada by region, this section focuses on the destination countries of remittances from Canada (Chart 7 and Table 4).^Note To determine this, respondents were asked, “In 2017, to what country did you send money most often?” Besides countries where respondents sent money most often, they were also asked to report up to five countries where they sent money in 2017. The amounts reported were summed up to determine the total amount sent to each country. 

The Philippines received a significant share of remittances from Canada, with $1.2 billion in 2017. India ranked second, receiving $794 million. Interestingly, the United States ($390 million) ranked third among countries receiving remittances from Canada. This could be because Canadian residents born in ODA-eligible countries may have relatives and friends who also migrated from their home countries but are living in the United States. Findings show that many Canadian residents born in ODA-eligible countries such as Haiti and Jamaica send money to the United States.^Note The last two of the top five countries receiving remittances from Canada are China ($292 million) and Pakistan ($236 million).

When remittance flows in 2017 are analyzed by sex of respondent (Table 4), the same top five countries emerge for men, even though the ranking changed slightly. At $558 million, India was the top country receiving money from male remitters 2017, followed by the Philippines ($407 million), the United States ($203 million), Pakistan ($182 million), and China ($168 million).

For women, the Philippines was the top country, at $770 million in 2017. Many women from the Philippines come to work in Canada under the live-in caregiver program and send substantial earnings to relatives or friend back home.^Note The Philippines is followed by India ($235 million), the United States ($185 million), China ($125 million), Indonesia ($55 million) and Pakistan ($55 million).

Although digital remittances are becoming popular, over half of respondents sent money from a money transfer store

The literature explores methods of sending money back home or to another country. Broadly speaking, money transfer methods can be categorized into formal and informal channels of sending money.^Note Formal methods include in-person and online banking and money transfer stores (MTSs), such as Western Union and MoneyGram. Recently, platforms such as WorldRemit, PayPal and Ria have been developed to simplify money transfers worldwide, making the remittance market more competitive. Money transfer methods such as hand-carrying money and informal network system are classified as informal methods.

However, sending money abroad is not a one-sided operation. Canadian residents who send remittances also take into account local conditions when choosing the transfer method.^Note This section examines the transfer method used by remitters during their last money transfer. Remitters might have used other money transfer methods in 2017; however, the fee paid was asked for the last money transfer used in 2017.

As shown in Table 5, 56% of respondents sent their last money transfer through a money transfer store with little variation by sex. This category includes more traditional methods, such as Western Union and MoneyGram, where most people go in-person to send money abroad. An additional 8% of respondents used an online money transfer store in the last money transfer. Men were about as likely to use online money transfers (8%) as women (7%). In-person banking and online banking were also important money transfer methods used in 2017 as shown in Table 5. In fact, 9% of respondents used either in-person banking during their last money transfer while 5% used online banking to send money abroad. However, there were no significant variations between men and women.

The survey also found that money hand-carrying is still a prominent method for transferring back home or to another country. Findings indicate that 10% of respondents brought money when travelling, or gave money for relatives or friends to others travelling to another country or visiting Canada.

Overall, respondents paid a fee equivalent to 6% of the last amount remitted in 2017

Since the early 1990s, international remittances migrants sent back home have steadily increased. In many developing countries, remittances have surpassed foreign direct investment (FDI), portfolio flows from financial markets, and official development assistance (ODA).^Note Remittances are sent at high frequencies and in relatively small amounts; resulting in higher sending costs.^Note The costs of sending money have been debated in the literature on remittances and policy decisions.^Note For example, the G20 countries are aware of the burden on international migrants sending money abroad and since 2000, they have committed to reducing these costs, aiming to lower sending costs to 3% of the amount remitted and eliminate corridors with costs higher than 5% by 2030.^Note

On average, remitters’ last money transfers cost them 6% of the total amount sent (Table 6).^Note This figure does not differ much from that reported in other studies. For instance, Yang (2011) reported in a study of El Salvador migrants in the United States that the average fee paid as a share of the total amount was 6%. Previous research consistently reported that banking is the most expensive channel for sending money abroad.^Note Findings from this study show that in-person and online banking cost about 4% which is below the 6% share for an in-person transfer through a money transfer store (Table 6).

The amount of money sent abroad strongly affects sending costs per transaction: Small amounts are costly

In general, individual remittance transactions tend to be small, and the transaction fees tend to be relatively high.^Note Table 6 presents transaction fees as a percentage of the total amount sent during the last money transfer by categories of amount sent. Transaction fees follow a clear gradient: they decrease substantially when people send more money. For instance, the transaction fees for in-person banking represented 11% of the amount sent if that amount was equal or less than $200. The fee for remitters who also used in-person banking services but sent $201 to $999 was 6% and 2% if the amount sent was $1,000 or more.

For currency exchange stores, the fee as a percentage of the amount transacted was 11% for amounts less than $201, 3% if the amount sent was between $201 and $999, and 1% if the amount sent was $1,000 or more.

In part because the average amount sent varies by destination region of the money transfer, average fee paid during the last transaction also varied by destination region (Chart 8). In 2017, the average fee paid in the last transaction, as a percentage of the amount sent, was higher for remitters who sent money to relatives or friends living in the Americas (9%). It was followed by Eastern Europe and Southern Europe (8%), and sub-Saharan Africa (7%). In contrast, remitters who sent money to an Eastern Asia country paid only 2% in remittance fees, mostly because they sent larger amounts on average.

More details about specific destination countries are provided in Appendix table A.14. Moreover, Tables A.15 and A.16 highlight variations in the level of fees paid by age group, birth region, year of arrival, employment status, personal income and region of residence in Canada. Among other things, the results show that on average, remitters residing in the Atlantic Provinces and in British Colombia paid the lowest transaction fees (5%), while those in Quebec paid the highest fees (8%).

Convenience for both sender and recipient is the main reason for choosing the last money transfer method

While there is evidence that the amount remitted and the money transfer method affect transaction costs, other factors can determine how a person chooses the money transfer method. These factors include convenience for both the sender and the recipient, cost, reliability, and timeliness. Altogether, convenience for both the sender and the recipient was the main reason respondents chose their method of sending money last time. This percentage was slightly higher among women (64%) than men (61%) (Table 7).

Findings also show that the percentage of respondents reporting that convenience for both sender and recipient was the most important factor for choosing the method they used in the last money transfer varies by birth region. For respondents born in Northern Africa, 47% reported that convenience for both sender and recipient was the main reason guiding their choice to use the last method of money transfer. In this region, the timeliness of the method (19%) was almost equally important as convenience for the recipient (21%), while this percentage ranged from 4% to 12% for respondents born in in other regions.

Remittances are mainly used to pay for living and medical expenses

Following Lucas and Stark’s paper in 1985, Docquier and Rapoport (2006) have documented migrants’ motivations for remittances. They provide a model of remittance-sending decisions that incorporates a variety of motives, including altruism, exchange (as compensation for services the migrant received from relatives or friends in the home country), insurance, loan repayment and investment.^Note However, how remittances are used once they reach the destination are beyond the sender’s control from abroad. According to Yang (2011), little is known about remittance-sending decisions, and specifically about whether migrants would like to control the money sent abroad. Yet this question is crucial to further understand the motivations for migration, intra-household resource allocation and remittance flows from host countries.

Respondents in this survey were asked how the money they sent is used, to the best of their knowledge (Chart 9).

Findings indicate that 59% of respondents sent money abroad to pay for living expenses,^Note or 61% of male senders and 58% of female senders. For 43% of respondents, medical expenses were another important motivation for remittances. Women (44%) frequently remit for medical expenses compared to men (42%). Finally, 35% of respondents sent money back home for gifts. Women (37%) were more likely to send remittances for gifts than men (32%).

How remittances are used also reflects the socioeconomic context of the destination region. For example, more respondents report using remittances to pay for education in sub-Saharan Africa (34%) compared with all other destination regions (Table A.9 in appendix). This may be due to the fact that education subsidies in many sub-Saharan African countries are either insignificant or non-existent.^Note Therefore, education systems rely on fees that parents or guardians pay to send children to school, a financial burden that households cannot easily afford. To help, migrants financially support families or households to send children to school.

Another interesting question is whether the use of remittances differs according to the destinations’ level of economic development (Table 8).

Findings indicate that paying for living expenses is still an important motivation for remitting. However, there is a notable gradient when moving from least developed countries to high income countries. While 73% of respondents reported using remittances to pay for living expenses in least developed countries, only 40% of respondents sent remittances for this purpose to high income countries. In contrast, 45% of respondents reported sending money as a gift to high-income countries. Looking at least developed countries, findings indicate that 24% of respondents sent money as a gift. The corresponding figures for lower-middle income countries and upper-middle income countries were 37% and 33%, respectively. The use of remittances is linked to the socioeconomic conditions of the destination region. Money sent to least developed countries fulfills basic needs such as food, health and education. As the cost of sending money abroad may impact the volume of remittance flows, lower costs could have positive effects on volume. Previous research suggests that lower costs will result in more money that can be either sent abroad or kept to help ensure the senders’ well-being.^Note

Conclusion

This report examined remittance flows from Canada in 2017, and remittance behaviors of people aged 18 years and above, who were born in eligible Official Development Assistance (ODA) countries. These respondents were either naturalized Canadians, permanent residents or persons with a work permit. More specifically, the report answered the following research questions:

• How many people sent money abroad in 2017?
• How much money was sent abroad by these people and where the money was sent?
• What are the channels these people use to send money abroad and how much does it cost?

These questions are of chief importance for two main reasons. First, there is evidence that remittances have surpassed Official Development Assistance in many developing countries, and they represent a significant percentage of GDP in some countries. Second, sending money can be costly given the lack of transparency of exchange rates among money transfer providers and relatively high fees charged to send money in some countries or regions.^Note

In 2017, 37% of respondents sent money abroad to relatives or friends, with a slight variation between men (38%) and women (36%). The capacity to remit was associated with individual and socioeconomic characteristics such as age, employment status, time since arrival in Canada, and personal income. On average remitters sent $2,855 in 2017.

Overall, remitters sent $5.2 billion in 2017; with men sending a bit more than women ($2.9 billion vs. $2.3 billion) which reflect previous results about the propensity to remit.

Digital technology has transformed the world. The development of digital channels has also had an impact on remittances, as it is much cheaper to remit digitally than traditional channels dominated by MTSs such as Western Union, MoneyGram, and the banking systems. Despite these recent developments, 56% of respondents went in-person to money transfer stores to send money; therefore they still have paid substantive amount of money to remit. In this report, people paid on average 6% of the total amount remitted, with small amounts (less than $201) remitted being costly compared with moderate and larger amounts.

Data from SIMT used in this report offer a very interesting research agenda. For instance, it is an invaluable source to estimate the use of on-line methods and digital remittances. The proportion of people using digital remittances is still low compared with traditional Money Transfer Providers (MTPs) such as Western Union and MoneyGram; yet it is well known that they are the cheaper option which could help immigrants to save money. What are the factors underlying this pattern and what are the barriers to widespread their utilization?

It is also possible to undertake more in-depth analysis to better understand remittance behaviours. Such analysis could help to explain, for example, some of the differences between men and women highlighted throughout the report. Furthermore, why women born in Philippines remit more than their male counterparts, while the opposite is true for all other birth regions? Finally, do women still remit on average less money than male counterparts when differences in personal income and other socioeconomic characteristics are accounted for?

Another potential research avenue is that SIMT data allow more in-depth analysis of variation in remittance behaviours by birth region. For instance, when controlling for personal income and length of time in Canada, do people from different countries or regions have similar remittance behaviours? If not, what are the drivers of these differences?  Finally, researchers might be interested to examine the main factors associated with the percentage of fee paid, using multivariate models including destination region, the money transfer method used and the amount sent, among other factors.

In summary, SIMT provides a comprehensive look into the propensity to remit and its association with individual and socioeconomic characteristics of naturalized Canadians, permanent residents and persons with work permit living in Canada; their remittance behaviours and needs, the knowledge and utilization of methods of transfer; and their experience with the remitting process. In addition, remittance flows can be estimated, a somewhat unique feature of the SIMT, and regional differences among regions can be assessed.

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