The effect of obtaining EU citizenship in former transition economies on remittance flows

Abstract

We estimate the effect of the granting of European Union (EU) citizenship rights on the flow of remittances from Italy. We use the EU enlargements of 2007 and 2013 as natural experiments. The results show a negative impact on remittance flows. The effect of the 2007 EU enlargement shows how Romanian and Bulgarian citizens reduced the average annual amount of remittances by 1400 Euros per year per migrant. In the case of the 2013 EU enlargement, we find a smaller decrease of about 50 Euros per year per Croat. These results are consistent after a series of robustness checks. We analyse this decline in depth to the extent that remittances are an important source of monetary flows in transition economies. We find that both the change in the taxonomy of immigrants from the new Member States and the improvement of economic conditions in the country of origin after the EU accession provide suggestive evidence on plausible mechanisms behind our results.