Can remittances buy peace?

This paper offers new empirical evidence on the effects of remittance flows on conflict incidence, onset, and duration in recipient countries. It improves on previous studies by controlling for unobserved heterogeneity among remittance recipient countries, serial correlation of conflict, and the possibility of conflict being endogenous to remittances. To motivate the empirical findings, a micro‐founded model of conflict is developed. The model shows that wealth transfers (such as remittances) can raise the opportunity cost of participation in conflicts which can lead to a reduction in both the number of rebels and the force used by the government forces.