Personal transfers in the balance of payments: estimation under changing migration patterns

Abstract

Personal transfers as part of remittances are becoming increasingly relevant due to growing migration movements influenced by rising income inequalities, political conflicts and increasing environmental challenges. Their impact on countries´economies call for reliable estimations to be used in policy decision making and economic analysis. After a revision of recent demographic changes in Germany, evidence of growing migration and heterogeneity in its diaspora composition lead to a revision of the current personal transfers estimation approach in the Balance of Payments framework. As Germany is a net sender country, the revision is focused on the debit side. Within the revision approach, alternative data sources are analysed, from which the socio-economic panel (SOEP) conducted on German households is selected together with additional administrative data on population statistics to develop an alternative estimation approach. The proposed new method uses SOEP information on socioeconomic markers such as age, employment status or migration background, which allow for a deeper understanding of personal transfers dynamics in Germany. First results appear to be more accurate and enhanced although showing a decrease in total volume of personal transfers and a slight change in country composition compared to the current estimation approach.