International Remittances Research Articles

The linkages between international migration, remittances and household welfare in Nigeria

Despite the increase in international remittance flows to Nigeria, there is dearth of studies on the linkages between international migration, remittances and household welfare in the country. This paper investigated the linkages between international migration, remittances and household welfare in Nigeria by examining household consumer and durable assets as welfare indicators as against the use of income and recurrent expenditure as indicators of the impact of migration and remittance on households. Data was from the 2009 World Bank Migration survey and were analyzed by descriptive statistics, asset index technique, and quintile estimation, ordinary least square and probit regressions. More of the migrants were single, males, students, had primary education, and had a mean age of 30 years prior to migration. The main determinants of receipt of remittance by households were age of the household head, region of residence, place of residence, and employment status of head of household. On aggregate levels, the proportion of remittance-receiving households in the fourth welfare quintile (13.88%) was more than non-remittance-receiving households (11.47%), while the proportion of non-migrant households in the fourth quintile (8.01%) was greater than the migrant households (.00%). The results also showed that having an international migrant and receiving of remittances significantly increases household welfare in Nigeria. Other variables that significantly affected household welfare in the area were age of the head of household, household size, region of residence, education and rural/urban place of residence.

Trickling down or brimming over gains from remittances? Local processes of economic levelling in rural highland Ecuador

This article analyses the processes of economic levelling attached to the reception of international remittances in rural Ecuador. It contributes to the debate on remittances and inequality by exploring the specific mechanisms through which socio-economic differentiation is neutralized or established in two villages of Andean Ecuador. Remittances do not occur in a socio-economic or cultural vacuum. Instead, they stem from specific economic and socio-cultural configurations, inserting into and changing pre-existing structures. The effect of remittances at the village level is dependent on conditions prior to migration. Remittances do not create previously non-existent differentiations, but economic inequalities prior to migration are reproduced and exacerbated as a result of international migration and financial remittances.

Internal Remittances, Vocational Training Costs and Rural-Urban Migration in Developing Countries

Internal Remittances, Vocational Training Costs and Rural-Urban Migration in Developing Countries

Is the complementarity between remittances and human capital development a panacea for income inequality reduction?

This study investigated if international personal remittances (remittances) and human capital development complement each other in reducing income inequality in emerging markets using panel data analysis. Although there seems to be consensus that remittances reduces income inequality despite the existence of divergent and mixed results, the channels through which remittances reduce income inequality has so far received very little attention and it remains an unsettled matter in literature. The study found out that human capital development and remittances complemented each other. Emerging markets should therefore implement human capital development enhancement policies in order to enjoy income inequality reduction advantages associated with remittances inflows.

Migration, Remittances and Human Capital Investment in Kenya

This paper investigates the relationship between international migration, remittances and human capital investment in Kenya. We use household level data from the 2009 Kenya Migration Household Survey (produced by the Africa Migration Project) to test our hypothesis and uncover a positive and significant relationship between the amount of international remittances a household receives and the amount of expenditures allocated to education (for all levels of education). We consider various robustness checks and find that our results hold up to various specifications, including an instrumental variable approach.

International Remittances and Private Schooling: Evidence from Kerala, India

AbstractThis study investigates the impact of international remittances on private school enrolment in Kerala. Using data from the 2010 Kerala Migration Survey and employing an instrumental variable (IV‐Probit) approach to address the endogeneity of migration, we found that remittances have a positive and significant effect on private school enrolment. After disaggregating the sample into different heterogeneous groups, we found that remittances have greater effect on boys, children residing in rural areas, and those belonging to socially advantageous groups and from higher wealth quintile. Children from lower wealth quintile and belonging to socially disadvantageous groups are least affected by migration and remittances.

The Effects Of Remittances On Economic Growth: Reexamining The Role Of Institutions

The extant literature is unclear about the effects of remittances on economic growth and the role of governance institutions. This study contributes to knowledge by investigating how domestic institutional capacity determines the ability of developing countries to benefit from remittance inflows. We employ data for 106 developing countries over a 13-year period (1996 to 2013) to test two related hypotheses. First, we test the hypothesis that countries with weak institutions will 'import' growth in the form of international remittances, to make up for any loss in growth arising from the 'bad' institutions. We call this the growth importation hypothesis. Second, we test the hypothesis that the synergetic growth value of the interaction between weak institutions and remittances will be positive due to the fact that the urgency to apply remittances efficiently in countries with weak institutions is high because of limited alternatives (that is, the opportunity cost of misapplying remittance proceeds is high). We call this the urgency hypothesis. We find strong evidence of the existence of both hypotheses. Specifically, we find that remittances stimulate economic growth in the full sample and in low income and lower middle income countries, but do not foster growth in upper-middle and high-income countries. On their own, domestic institutions in low income and lower middle-income countries do not promote growth unless they are combined with remittances. However, in upper middle and high-income countries, institutions, on their own, are strong enough to promote growth, and, in doing so, act as substitutes to remittances in economic growth. It is clear from the positive effect of institutions, physical capital and inflation on growth in upper-middle-income and high-income countries that, the strengthening of institutions, the rapid accumulation and effective utilization of physical capital, and the pursuit of macroeconomic stability are vital for promoting growth in these countries. For low income and lower middle-income countries, they must upgrade their institutions to reduce market imperfections, and ensure investments in growth enhancing projects. But until then, low income and lower middle-income countries must facilitate remittance inflows in order to spur growth.

Philanthropy, Remittances and Identity: The Case of London-based Sri Lankans

Although expatriate remittances are a major topic of study in the world of development, relatively little research has taken place on the motives and meanings of international remittances. This article examines Sri Lankan expatriates in the United Kingdom. It focuses on charitable and philanthropic activities and argues that these can only be understood within the context of the personal histories of the donors.

Migrant remittance behavior in Uganda: A household analysis

Background: World over, development of nations is directly linked to migration since one in seven people in the world is a migrant and a quarter of them, international migrants (Ratha, 2005). The economic importance of international migrants has been demonstrated by international remittances that are sent to families in the migrants’ home countries. According to World Bank, 2015, remittance flows to developing countries were expected to reach $414 billion in 2013 (up 6.3 percent over 2012), and $540 billion by 2016. Worldwide, remittance flows may reach $550 billion in 2013 and over $700 billion by 2016. Despite an increased interest in the role of international remittances at the international level, sparse information that exists in Uganda reveals that little or no attention has been put on examining whether remittances are invested in development or non- development ventures at household level (Wamala, 2010). This research gap warrants a need for studies on understanding the role of international remittances. Exploring the role of remittances and how it offers ingredients to enhance the development potential for citizens is important. This will be a contribution to the development in Uganda given that during the global financial crisis remittances proved resilient by falling with a minimal margin compared to the foreign direct investment; private debt and portfolio equity flows. Data Sources: Data from the survey on personal transfers by Ugandans living abroad during the year 2010 is used. This survey was the fourth in a series of annual surveys jointly conducted by Bank of Uganda and the Uganda Bureau of Statistics. Methods: Complementary log-log regression model was used because of the small numbers of households in the categories of interest (asymmetrically distributed). Survey weights were applied to data in order to account for the complex survey design including clustering and stratification. Results: Remittance receipt status was determined by region of the household, number of rooms in the house, household main source of lighting fuel. Using remittances for development was determined by sex of the household head, household regional location, house ownership status sex, marital status and senders’ residence. Conclusion: Results show that a household that had a member abroad also had higher chances of receiving remittances compared to the household with no member abroad. Results on the contrary found household and household head characteristics significantly associated with remittance receipt status of a household. Use of international remittances for development of households was significantly determined by sex of the household head, regional location of the household, house ownership status and number of rooms in the house. It is therefore recommended that government should leverage migration opportunities for women and also expand migration opportunities across all regions of the country since it augments development for households with migrants

Emigration, remittances and emerging family structure: findings from a household survey in eight selected villages in Eastern Uttar Pradesh, India

Migration from India to the Gulf Countries has increased dramatically in recent years. Does it actually have an impact on the joint family structure? India has been known for prevailing type of joint/extended families. This paper aims to throw new evidences for introducing the concept of “federated family”. Using primary survey data collected from 328 rural emigrant households in eight villages from the district of Kushinagar in eastern Uttar Pradesh in India, this paper contributes to the debate of socio-economic development and impact of international remittances at migrants’ places of origin. It is the first study which addresses the concept of federated family in India. Federated family seems to be a joint family, where all its members stay under the same roof but use separate kitchens.

Are remittances helping lower poverty and inequality levels in Latin America?

Although the recent economic expansion and redistributive fiscal policies implemented in Latin America since the turn of the century have raised the wellbeing of the population, the private monetary transfers from immigrants to their relatives back home are proving to be one of the most stable drivers of this change. This paper uses a new dataset for 18 Latin American countries covering the 2000–2013 period to examine the effectiveness of international remittances in reducing poverty and inequality. Dynamic panel data results using a number of measures for remittances indicate that increases in remittances have a negative and statistically significant impact on overall poverty and inequality in the region, even if it exacerbates moderate poverty. Such effect is robust to alternative remittances measures used to control for endogeneity concerns. In particular, remittances seem to have a stronger effect in countries receiving smaller amounts and in countries with a larger share of its population working abroad. Regional differences also affect the impact that remittances have on the wellbeing of the population, but financial development is found to have a limited impact on the effectiveness of remittances on poverty and inequality.

International Migrant Remittance and Productivity Growth in Ghana

The study assessed the relationship between productivity growth and remittance at the macro level. Existing studies have largely focused on the micro level which falls short of revealing how shocks in the economy are transmitted through international remittance. Using time series analysis for data covering the period 1975-2013, the results from trend equation revealed that remittance inflows remained positive and increased modestly over time while economic growth as measured by the growth in labour productivity per person has been fluctuating. Regression results showed that remittance is significantly and negatively related to productivity in Ghana. The study revealed that foreign direct investment, official development assistance and international trade are positively related to productivity. It is recommended that government should make the business environment friendly so as to enhance foreign direct investment and boost trade as these have positive impact on productivity.Keywords: Remittance, Total Factor Productivity, Quantile Regression, Migrants, Ghana

Mobile Money Services as a Panacea to Financial Inclusion in Sub-Saharan Africa

One of the most important drivers for sustainable economic growth and development is financial inclusion. This explains why financial exclusion is a leading cause of extreme poverty and a key barrier to growth. The level of financial inclusion in Sub-Saharan Africa still remains low. However, there is evidence that mobile money technology, taking advantage of the high level of mobile phone penetration in the region, has been seen to drive financial inclusion. However, very few studies have been conducted in the region to particularly establish the extent mobile money service usage has leveraged financial inclusion. In this study, we investigate the extent to which three most common mobile money services namely, sending money, receiving money and bill payment have leveraged financial inclusion in a Sub-Saharan African country like Uganda. Our study reveals that the most widely used mobile money service in this rural area was for receiving money. This has greatly enhanced financial inclusion by facilitating both domestic and international remittance.

Remittances, banks and stock markets: Panel evidence from developing countries

The study investigates dynamic and causal linkages among international remittance inflows, banking sector development and stock market development in a large panel of developing countries. We use two stage least squares and impulse response functions to shed light on the remittance-bank-stock market nexus. We find that remittances promote banking sector development in low remittance receiving countries, but not in high remittance receiving economies. We establish a bi-causal negative link between stock markets and remittances in countries with developed banking systems. In low remittance recipient countries, remittances decrease stock market development; however, in remittance dependent countries, remittances promote stock market development. Again, stock market development promotes remittance inflows in remittance dependent countries, while obstructing it in low remittance recipient countries. We suspect lingering doubts about the quality of developing country stock markets to be behind this latter result, though the fact that most developing countries’ financial systems are bank based could also play a role.

Food security in a remittance based economy

We interviewed 395 subsistence farming households from Chitwan, Nepal in order to identify the impact of remittances and other explanatory variables on child, adult, and household food security. The highest category of the IV - ordered probit regression models with cluster robust standard errors indicated that the food security status of households, adults and children was explained by gender and age of household head, adoption of conservation agricultural technology, number of fruit trees, and income from agricultural and livestock sources. Additional variables affecting only children’s food security were the adoption of hybrid rice or maize varieties and the wage income or salary earned within the district, whereas an additional variable affecting only household and adult food security was the wage income earned outside the district. Households receiving international remittances were more food secure than those households that did not receive such remittances.

Las TIC: una alternativa para bancarizar las remesas del exterior en Colombia

El presente artículo presenta un estudio descriptivo acerca de cuáles serían las formas de bancarizar a las personas que reciben remesas del exterior, teniendo en cuenta el auge que en los últimos años han tenido los movimientos migratorios de colombianos hacia diferentes partes del mundo y su inserción en diferentes empleos para generar recursos que son enviados a sus familias en Colombia. En este documento se demuestra cómo en el caso de Bogotá se identifican varios factores recurrentes que impiden que estas personas se decidan a abrir un producto financiero, ya sea porque no cumplen sus expectativas económicas o por temor a ingresar a un sistema financiero que indague minuciosamente el origen de estos recursos. De la misma forma se identifica la falta de productos orientados a este segmento, en especial en lo que se refiere a alternativas con plataformas virtuales. A través de un instrumento de medición como la encuesta y determinando una muestra de usuarios bancarios, se tomaron las percepciones frente a estas limitaciones de bancarización.
 Finalmente, se determinan las características demográficas principales de los beneficiarios de remesas internacionales y las razones por las cuales no son clientes del sistema financiero, dando unas recomendaciones sobre los ajustes que deben hacer las entidades sobre sus productos y servicios, para lograr vincular efectivamente este segmento de clientes potenciales.

Remittances and social resilience of migrant households in rural Bangladesh

Remittances from migration have significant impacts on economic livelihoods in developing countries. Yet, to date, scholars have paid little attention to the broader ways in which migrant remittances enable rural households to improve their capacity to respond and adapt to economic as well as environmental challenges. This paper draws upon ‘social resilience’ as a conceptual tool to investigate how monetary remittances are used by households to enhance their ability to respond to challenges, build economic, human and cultural capital, and plan for the future. Using data from a qualitative study of rural migrant households in Bangladesh, we provide an analysis of how different strategies for investing internal and international remittances contribute to household social resilience. Our analysis reveals that remittances in general contribute to improving the social resilience of migrant households. Remittances are important in building economic capital through accessing land for agricultural production as well as housing construction. Remittances also enable households to access education, and thus build their human capital. Nevertheless, the paper reveals an important gender dimension in the choice of investment strategies. Female-headed households tend to invest remittances in human capital, and such strategies may contribute to the reinforcement of existing gender inequalities and do little to improve resilience.

Book Review

Migrating into Financial Markets, How Remittances Became a Development Tool by Matt Bakker, Chicago: University of California Press, 2015, pp. 283, ISBN: 9780520285460.Over the last three decades scholars and policy makers have made efforts to evaluate the potential for international remittance transfers as the tool for economic development in the context of different countries and for different time periods. There is evidence that remittances increase student retention rate in El Salvador (Edwards and Ureta 2003) and remittances increase investment in entrepreneurship (McCormick and Wahba 2001, Dustman and Kirchman 2002, Woodruff and Zenteno 2007 and Mesnard 2004). Taylor, Rozelle and Brauw (2003) have reported increased expenditure on agricultural investment.

Remittances, social security, and the crowding-out effect: Evidence from Vietnam

In the absence of adequate social security systems, many people in developing countries, especially the poor and vulnerable, cope through migration-related remittances. However, when remittances, internal or international, provide social benefits similar to public transfers they may overlap: ‘crowding-out’ effects occur. Employing three long-sample Vietnam Household Living Standard surveys undertaken during the 2000s, this paper studies the crowding-out effects of remittances in Vietnam, a developing country that has experienced a soaring inflow of remittances since 2000. Significant crowding-out effects for both domestic and international remittances on income are found below the poverty line in Vietnam, consistent with an altruistic motive. Beyond this, transfer derivatives are positive and statistically significant in both areas, suggesting a switch of motives from altruism to exchange at the poverty line. The substituting relationship between public transfers and remittances observed for the rural poor reveals key challenges to delivering an equal and efficient social security system in the country.

THE IMPACT OF MIGRATION AND REMITTANCES ON DISTRIBUTION AND SOURCES OF INCOME: THE MEXICAN RURAL CASE

The objective of this research is to determine the impact of migration and remittances on rural households’ income sources, as well as the implications of these impacts on the income distribution of the source communities. Using data from the Mexico National Rural Household Survey (Encuesta Nacional a Hogares Rurales de México, ENHRUM), the results show that national remittances and the predicted number of internal migrants impact in a positive way the incomes obtained from livestock activities. However, international remittances impact negatively on this income source due to the household’s loss of one of its members. Also, the results support the new economics of labor migration (NELM) hypothesis that points out that the remittances eliminate restrictions in different types of rural households’productive activities.