Tag Archives: Remittances

Remittances Improve the Living Conditions of recipients

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Remittances considerably reduce the number of poor households in rural areas. (Photo F. Dubessy)

Migrants’ remittances contribute to improving the living conditions and level of education of recipient families. A study on the impact of short-term migration with an in-depth analysis of the cases of Algeria and Morocco was carried out by FEMISE economists.

Since 1995, there has been a six-fold increase in remittances towards developing countries, reaching a total of 325 billion dollars in 2010. It is clear that these flows have a great impact on both the economies and the families that receive them. It explains why the Euro-Mediterranean Forum of Economic Science Institutes (FEMISE) undertook a study, under the guidance of Professor Mouhoud El Mouhoud, who teaches at Paris Dauphine University to measure this impact.

The study, of FEMISE 33-22 entitled “Impact of remittances on poverty and inequality: Lessons from two new surveys conducted in Morocco and Algeria ”, provides a wealth of new information.

Housing, health and education – the largest items of expenditure

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Since 1995, there has been a six-fold increase in remittances towards developing countries, reaching a total of 325 billion dollars in 2010. (Photo BL)

The empirical results from this study show that remittances sent by migrants considerably reduce the number of poor households in rural areas. They also prevent vulnerable households from falling into poverty. In reality, even though not all migrants are from poor families, the money they send back can have a positive knock-on impact on spending”, the report explains.

Generally, money is spent on goods and services: in particular housing, health and education, are the largest items of expenditure.

“(…) Migrants’ remittances positively influence parental decisions to allow their children to continue their studies, particularly if they are male and enrolled in a high school or a higher education institution”, points out report FEM33-22.

While some migrants choose to leave their country of origin in order to raise the living conditions of families remaining in the home country, some decide not to transfer any money. According to the study, the amounts vary according to migrants’ income, country of origin, host country and duration of their stay abroad.

On the whole, remittances are sent towards countries with weak economic performance. They reduce the number of people living below the poverty line by 9%.

In Algeria, the study observes a significant difference between those populations that benefit from migrants’ remittances and those that do not. Disparities can also be seen between regions. While Nedroma for instance, is characterised by high rates of emigration and low rates of remittances, Kabylie, with links to the French colonial past, sees many migrants return upon retirement. In the latter case, the study notes the importance of pensions paid to the former migrants.

In Morocco, remittances are the primary source of foreign currency, ahead of tourist receipts. In 2011, they accounted for 351 billion dollars.
However, while remittances do improve living conditions, they cannot replace comprehensive and inclusive public policy.

Article by Nathalie Bureau du Colombier, Econostrum. www.econostrum.info.

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Photos by Econostrum: Photo 1 F. Dubessy; photo 2 par BL

Impact of Remittances on poverty and inequality: Lessons from two new surveys conducted in Morocco and Algeria

Migration is a demographic phenomenon of great magnitude. Indeed, migrants accounts for about  215.8 million*, equally divided between men and women. Migration affects all countries, although the so-called developing countries have the highest rates of emigration, it is not only a movement from these countries to the North. Indeed, in 2009, 74 million* people have migrated from a southern country to another southern countries, often sharing borders. The causes of this South-South migration are multiple wars, famines, weather conditions and economic motivations. Migration from the South to the North represents some 97.51 million people whose main motivation is often economic or family reunification. Finally, in 2009, 37.7 million people* migrated from one developed country to another developed country, while 6.5 million* went south.

In most cases of migration from poorer to richer countries, individuals seeking to improve their living conditions. When they do not migrate permanently, they are more likely to send part of the money earned in the host country to their families in the home country. These remittances represent huge sums: in 2010, remittances to developing countries amounted to 325 billion*. Their level has increased sixfold since 1995. This explosive growth is in part due to the increased number of international migrants, but also improving the means available to migrants for effecting such transfers. In addition, the interest in this phenomenon in the literature and government has led to a better statistical coverage of these flows.

The amount of transfers far exceeds development aid in Asia, Latin America, North Africa and the Middle East, and are the main source of external financing in the latter part of the world (to direct investment abroad). The main recipient countries are India (55 billion), China ($ 51 billion *), Mexico (22.6 billion) and the Philippines (21.3 billion) the amount records are due to their very high rate of emigration. For some countries, these remittances constitute substantial financial resources they represent a very significant share of gross domestic product: in 2009, remittances accounted for 35% of GDP Tadjikistan, 28% and 25% Tonga and Lesotho, making these truly dependent countries of migration. In addition to representing substantial amounts, transfers are the only outside income donated directly to households. They have a very significant impact on the welfare recipients in countries where poverty is very present. In addition, these funds are very stable, and counter-cyclical nature allowing beneficiaries to deal more effectively with crises they face.

The importance of money involved has recently relaunched the literature on the broad topic of the impact of remittances to the country of origin. The themes are many, but still a topic particularly analyzed and discussed regarding the impact of remittances on poverty and income distribution in the country. The literature has gripped this for several years and looks into whether this money donated directly to households, allows people in developing countries out of poverty and to make society more equal.

Our study answers the question of the effect of migration on poverty and inequality from the realization of two original household surveys conducted in Morocco and Algeria. We use two original surveys we conducted in Algeria and Morocco with a sample of households with and without migrants and receiving or not receiving of remittances? We compare the levels of poverty and inequality prevalent today than estimated for a situation no migration or transfer to which migrants would be reinstated in local life. The first part presents the work on two Algerian regions of high emigration rates Kabylia and Tlemcen region.

Vol 9: The Socio-Economic Impact of Migration Flows- Springer

Migration_ArtalAnother group of research reports funded by FEMISE, through the European Commission grant, have been the subject of a new edited volume. Published Under the title of : “The Socio-Economic Impact of Migration Flows- Springer”, the volume that is edited by Andres Artal-Tur, Giovanni Peri and Francisco Requena-Silvente is considered a new contribution to the knowledge about issues related to migration.

The volume is a value added because:

  • The migration topics are covered from both a theoretical and empirical view
  • It includes recent developments in the field and utilises the latest research methodologies
  • Notable policy focus and guidelines in all chapters
  • Though globalisation of the world economy is currently a powerful force, people’s international mobility appears to still be very limited. The goal of this book is to improve our knowledge of the true effects of migration flows. It includes contributions by prominent academic researchers analysing the socio-economic impact of migration in a variety of contexts: interconnection of people and trade flows, causes and consequences of capital remittances, understanding the macroeconomic impact of migration, and the labour market effects of people’s flows. The latest analytical methodologies are employed in all chapters, while interesting policy guidelines emerge from the investigations. The style of the volume makes it accessible for both non-experts and advanced readers interested in this hot topic of today’s world.

Downland the table of contents, preface and acknowledgement (in pdf)

To read more or to order the book (please follow links to Springer website)

Workshop on Migration in the Mediterranean, 16-17 April 2011, Istanbul, Turkey

Migration_work_2011FEMISE and ERF (Economic Research Forum), jointly organized a workshop in Istanbul on 16 and 17 April 2011 under the theme of: “Migration in the Arab Region: Causes and Consequences“, to better understand the evolution of the migration phenomenon in the Mediterranean.Best-qualified researchers in the field presented results of their latest research and exchanged their views on the subject. (Photo FEMISE: from left : F. Docquier, I. Awad, JL.Reiffers et K. Sekkat).

The Mediterranean region is among those in the world where migration plays a central role. It is characterized by large inflows and outflows of workers, by a large stock of migrants abroad and by the main role played by migrants’ remittances in the macroeconomic balance of home countries. Some Med countries like Morocco, Algeria and Lebanon are responsible for some of the largest Diasporas abroad. There are also significant flows of migrants from Arab countries (especially along with the Gulf countries) that develop as the South-South integration continues to deepen.

The purpose of this workshop was to review the analytic work done by researchers specialized on some of the most important aspects of migration in the region by addressing the following questions: What is the overall impact of migration on employment, education, social welfare and democracy? What is the influence of the Diaspora on domestic institutions? Can remittances promote financial development and entrepreneurship? Can they reduce poverty and inequality? The seminar was concluded with the presentation of a research agenda to develop in the future, some of which will notably be proposed to the FEMISE Scientific Committee for its forthcoming call for proposals. Below a short presentation of the main messages communicated during the two days, and at the end of the article, links to all papers and presentations.

Docquier_mig_2011Frédéric Docquier (University of Louvain) and Khalid Sekkat (University of Brussels), show that joint analysis regarding causes and consequences of migration, although determinant, was still a neglected research area.  On issues related to the overall impact of migration, researchers found the following: First, it is clear that economic variables play a predominant role and that emigration is largely influenced by factors such as income differentials between countries or network effects ; second, migration may generally lead to a “brain gain” for the country of departure, the hypothesis of a “brain drain” made during the 80s has been overtaken by the need for countries to be an integral part of globalization. Thus, the workshop emphasized that although the migration of skilled workers can have negative effects in the short term, it can have a positive impact on employment, wages and social welfare on origin countries in the long term. It was noted that the migration of qualified women produced significant effects on fertility, child health and education.

The Diaspora also has a significant influence on the institutions of the country of origin: Michel Beine (University of Luxemburg), illustrates this with an analysis of the direct and indirect impact and economic effects of migration on international institutions. Remittances and norms’ transfer have a significant and positive impact on democracy, transparency and education in particular. The research conducted by Jad Chaaban (American University of Beirut) and Wael Mansour (Lebanon World Bank) confirms and highlights the positive impact of remittances on education in 3 countries (Jordan, Syria and Lebanon).

Mig_work_LorcaThe recent waves of uprising in the Arab world have been caused by the discontent of the younger generation to the issues of unemployment and lack of freedom. Alejandro Lorca (Universidad Autonoma de Madrid) suggests that migration and remittances, however, cannot substitute for effective policies and reforms in the economic and political sphere of the origin country. Governments of the origin countries must create enough jobs to absorb labour, and the European Union should encourage this development to ensure economic stability in the Euromed region.

Can migrants’ remittances also promote financial development and entrepreneurship in the country of origin? Do they have an impact on Poverty and Inequality? El Mouhoub Mouhoud (University Paris Dauphine) presented the first results of a survey on the determinants and the use of transfers from France to the Maghreb countries. Return migration represents a significant percentage of entrepreneurs and a significant economic contribution that influences the development process.

Whaba_mig_2011This point is also confirmed by the research of Jackline Wahba (University of Southampton) and Bachir Hamdouch (National Institute of Statistics and Applied Economics, Morocco) which addresses the impact of returning migrants on the labour market in the MENA region through various studies on countries such as Egypt and Morocco. The Moroccan Diaspora constitutes 10% of the population and remittances 9% of GDP, and plays an important role in reducing poverty and inequality. Returning migrants are more likely to become self-employed (entrepreneurs) or employers and tend to earn 46% more than non-migrants. The research conducted by Ragui Assaad (University of Minnesota) confirmed that male migration increases the supply of the female labour force generating a profound impact on households.

These studies confirm that international migration is crucial for the global economy and return migration has a significant economic contribution in the origin country especially through savings and capital accumulation.

To conclude the workshop, the last session was devoted to investigate areas for future research on the topic of migration. Current research is mainly conducted on the relationship between remittances and poverty, education, entrepreneurship and wages, while future research should seek to analyze the effects of financial crisis on migrant remittances on receiving countries or study the impact of the Diaspora on the institutions of the country of origin focusing on governance, corruption and democracy. The impact of family reunification policies on female migration and gender studies of migration are also areas of research currently neglected. Other questions can be addressed, such as the determinants of illegal migration and its consequences. Is there a balance between the needs of the region between the North and South shores? And how to analyze and optimize the temporary and circular migration phenomenon?

Jackline Wahba University of Southampton recommends:

  • More research to clarify policy on migration,
  • Better understanding of the opportunities and challenges faced by immigrants and their families: the incentives and constraints they face,
  • Access to necessary data and the use of reliable methods to achieve this research successfully.

In conclusion, Jean Louis Reiffers, coordinator and president of the FEMISE scientific Committee, stresses that on top of research based on micro-economic behaviour and the effects on brain gain, it is necessary to place migration in the consistent context of the greater region. This involves:

  • Reasoning in the framework of North-South interdependence: the nature of the transfer equation, demographic complementarity, circular mobility, etc..
  • To link the trends to increased migration from the South with the evolving capacities of integration in the North
  • To go beyond the migration of people towards analyzing the migration of ideas, particularly through the development of ICT
  • To raise the issue of immigration to the South (particularly from sub-Saharan Africa).

Access to the presentations:

1. Geographic, Gender and Skill Structure of International Migration by  Frédéric Docquier, Marfouk, Ozden and Parsons (powerpoint presentation: see below F. Docquier paper 2)

2. A Unified Analysis of International Migration and Cross Country Inequality by Frédéric Docquier and Khalid Sekkat (download the powerpoint presentations by Docquier)

3. Skilled migration and the transfer of institutional norms by Michel Beine and Khalid Sekkat (download the powerpoint presentation)

4. Emigration and origin country’s institutions: Does the destination country matter? by Michel Beine and Khalid Sekkat (download the powerpoint presentation)

5. The Impact of Remittances on Education in Jordan, Syria and Lebanon by Jad Chaaban and Wael Mansour (download the powerpoint presentation)

6. Return Migration and Entrepreneurship in Morocco by Bachir Hamdouch and Jackline Wahba

7. Return Migration and Labor Market Outcomes in Egypt By Jackline Wahba

8. Egyptian Men Working Abroad: Labour Supply Responses by the Women Left Behind, By Ragui Assad (download the powerpoint presentation)

9. The Euro-Med Perspective on Migration: The Role of Economic and Social Reforms By Wai Mun Hong, Alejandro Lorca, Eva Medina (download the paper)

10. Impact des transferts de fonds sur la pauvreté et les inégalités : les premiers résultats d’une enquête conduite au Maroc by E.M. Mouhoud et Hicham Hanchane (download the paper/download the powerpoint presentation)

11. Towards a Future Research Agenda on International Migration in MENA By Jackline Wahba

Articles based on this workshop:

Remittances from migrants an asset to countries of origin