when migrants are better connected through, for example, family members living in the source country. Permanent migrants are typically accompanied by their families and have much less incentive to maintain networks in the source country and hence they are likely to remit less. Grieco (2004) provides a useful overview of the relevant literature and concludes that temporary or circular as opposed to permanent and family reunification based migration is likely to enhance the propensity to remit.

Empirical evidence on the issue comes from two related sources including the remittance-decay literature and other studies which use a migrants’ intention to return home as a proxy for temporariness. Early work on remittance decay produced somewhat mixed results. Brown (1997) looked at the remittance behavior of Tongans and Samoan migrants in Sydney and found no evidence of remittance decay. Funkhouser (1995) also found very weak evidence of remittance decay. However, more recent work finds strong evidence of remittance decay. For instance, Brown and Connell (2004) use the same data as in Brown (1997) mentioned above but they split the migrants into two groups: nurses vs. the rest. They find strong evidence of remittance decay for the latter but not for the former. Amuedo-Dorantes et al (2005), Fairchild and Simpson (2006), among others, find strong evidence of remittance decay.

In the present context, the remittance decay literature suffers from an important shortcoming because it implicitly treats those who have been in the host country for a short period as temporary migrants, even if these migrants have no intention of returning. Our interest is in the difference in behavior of those who know that they are obliged to return from those whose move is more open-ended. Two migrants with the same duration of stay may behave very differently depending on their intention to stay permanently or not in the host country. Galor and Stark (1990) developed an early theoretical model showing that the propensity to remit is higher when migrants face a positive probability (intention) of return. Merkel and Zimmerman (1995) used a vast dataset from West Germany to test this hypothesis. Controlling for 15 variables including the number of years spent in the host country, they find that the intended duration of stay had a negative and statistically significant effect on the level of remittances. Brown (1997) and Ahlburg and Brown (1998) reach a similar conclusion in their studies of Tongan and Samoan migrants in Australia. More recently, a supplementary questionnaire on international transfers was added to the Indian Readership Survey by Devesh Kapur and Mark Rozensweig specifically targeted at understanding the link between temporariness (intention to return) and remittances. Rozensweig (2005) summarizes the findings from this survey and notes that after controlling for a number of factors, the remittance level of intended to returnees was about 3 times the remittance level of those who had no intention to return. Glytsos (1997) contrasts the remitting behavior of Greek migrants to Germany (temporary) and Australia (permanent) and also between early Greek-German (temporary) to later one (permanent). He finds strong evidence that temporary migrants have a much higher propensity to remit than permanent ones. Further, since temporary migrants are likely to leave their spouse and dependents in the source country, their propensity to remit is likely to be higher than permanent ones on this count too. A number of studies confirm this possibility. For example, AmuedoDorantes et al. look at the remitting behavior of Mexican immigrants in the U.S using data from Mexican Migration Project (MMP93) and find that having a spouse or 23