Sharing Norm Pressures and Community Remittances: Evidence from a Natural Disaster in the Pacific Islands

Abstract

Migrants are often subject to social pressures to remit beyond their own households, to share the benefits of migration with the wider community in their home country; these are ‘community remittances’. We hypothesise that community sharing norm pressures are stronger in locations with more extensive home community networks. We also postulate that the responsiveness of remittances to sharing pressures is subject to diminishing returns, attributable to a donor fatigue effect. Using customised survey data from three Polynesian migrant groups in metropolitan and regional Australia, we estimate double-hurdle regression models of community remittances. To identify the effects of sharing norm pressures we exploit an exogenous (cyclone) shock to home country incomes affecting one sub-group. We find strong evidence in support of the postulated responsiveness of community remittances to location-related differences in sharing norm pressures, and the presence of a donor fatigue effect. The policy implications are discussed.     

Remittance Effects on Child Labour: Evidence from Burkina Faso

This article explores the effects of remittance receipt on child labour in an African context. We focus on Burkina Faso, a country with a high prevalence of child labour and a high rate of migration. Given the complex relationship between remittance receipt and household time allocation decisions, we instrument remittances using economic conditions in remittance-sending countries and explore heterogeneous effects across different types of potential remitters. While remittances have no significant effect on child labour on average, transfers reduce child labour in long-term migrant households, for whom the disruptive effect of migration is no longer felt. We find no gender difference but remittances seem to affect mainly the labour market participation of younger children.     

Poverty and Disasters: Do Remittances Reproduce Vulnerability?

Abstract

In many low-income countries, remittances are important in sustaining people’s livelihood and become even more significant during disasters. Meanwhile, the literature suggests that remittances are mainly accessible to middle and upper-income households, rather than to the poorest, thus implying differential capacities amongst households to overcome crises. The present study uses cyclone Evan that hit Samoa in December 2012 as a case study to test this hypothesis. It focuses on the village of Tafitoala and draws on interviews and participatory activities undertaken with the poorest households of the community. It indicates that the poor receive little to no remittances and that they struggled more than the rest of the community to cope with and recover from the cyclone. Their lack of access to remittances had negative consequences on the security and sustainability of their livelihoods. We conclude that remittances reproduce or even increase both inequalities and vulnerabilities existing within the community of origin.     

The Impact of International Remittances on Child Outcomes and Household Expenditures in Nepal

Nepal has one of the highest ratios of international remittances to gross domestic product in the world. We examine whether the massive inflow of international remittances affects child schooling, child labour and household expenses. Controlling extensively for a host of observed characteristics of households and migrants, and using an instrumental variable approach, this research finds no effect of international remittances on child education or child labour in Nepal. However, it does find a significant increase in non-food expenditures, including education spending, due to international remittances. Despite increased expenditure on child education, educational outcomes are not improving because of international remittances.     

Remittances and Happiness of Migrants and Their Home Households: Evidence Using Matched Samples

This paper explores how remittances influence happiness among migrants and their households of origin. It is based on a novel data set of matched samples of Bangladeshi migrant households (living in the UK and Malaysia) and their origin families in Bangladesh. Empirical findings suggest that remittances play a significant role in stimulating migrants’ happiness. We also find that the households of origin’s life satisfaction not only depends on receiving remittances from the emigrants, but also other factors such as number of migrants from the household living abroad and the migrants’ country of destination.     

Poverty Transition in Rural Vietnam: The Role of Migration and Remittances

This study combines insights of the New Economics of Labour Migration with the asset-based approach to welfare dynamics using panel household data from Vietnam. This method allows us to determine whether poverty transitions induced by remittances are actually structural, that is, based on asset growth and therefore long term, or stochastic, that is, based only on short-term increases in income, which implies a risk of falling back into poverty. To control for endogeneity of remittances, we use household fixed effects and instrumental variables estimation. The paper shows that remittances have a positive impact on asset growth and that the impact differs with welfare status and ethnicity.     

Remittances,Regime Type,and Government Spending Priorities

Previous work suggests that remittances enable governments to reduce spending on public services and divert resources to serve their own interests. We argue this need not occur. Building on recent work which shows that the impact of remittances is contingent on the domestic environment in remittance-receiving countries, we hypothesize that (1) remittances are more likely to increase government spending on public services in democracies than in autocracies and (2) remittances are more likely to finance activities that deter political competition in autocracies than in democracies. Using a sample of 105 developing countries from 1985 through 2008, we find strong support for our hypotheses when examining the impact of remittances on public education, health, and military spending. We also provide suggestive evidence for the mechanism underpinning our results: micro-level evidence on remittance recipients’ preferences and political engagement.     

Remittances and Chain Migration: Longitudinal Evidence from Bosnia and Herzegovina

Abstract

Most of the literature on remittances focuses on their implications for the welfare of family members in the country of origin and disregards their role as facilitator of chain migration. We address this issue with the use of longitudinal data from Bosnia and Herzegovina, one of the primary exporters of migrants and recipients of remittances in the world. We find that remittances have a significant positive impact on the migration prospects of their recipients. Better-endowed people are most likely to migrate, which highlights a potential negative implication of migration and remittances.     

Remittances,Poverty, Inequality and Welfare: Evidence from the Central Plateau of Burkina Faso

This paper applies Gini and concentration coefficient decomposition as well as the Foster-Greer-Thorbecke poverty index and the Stark-Yitzhaki welfare index to new data from four villages in Burkina Faso, to compare the marginal effects of remittances from intercontinental and intra-African migration on inequality, poverty and social welfare. Evidence is found that intra-African remittances reduce inequality while intercontinental remittances have the opposite effect. Also, it is found that although remittances from intercontinental migration are associated with much lower incidence, depth and severity of poverty, the marginal impact of remittances from this form of migration on social welfare is limited because recipients do not include the rural poor.     

Remittances,Banking Status and the Usage of Insurance Schemes

Empirical evidence that migrants send home more remittances after disasters raises the question of whether remittances are used to self-insure, substituting for both formal and informal insurance. We investigate this question using a unique data set on the usage patterns of financial services by households in South Africa. We show that the likelihood that a respondent has a formal funeral cover increases with income and banking status. However, it is lower for individuals receiving remittances, which supports the idea that remittances act as self-insurance. We also show that other risk management strategies influence the purchasing of formal funeral cover. Finally, we find that determinants of informal insurance differ from those of formal insurance.     

Do Remittances Diminish Social Violence?

This paper represents the first attempt to formalise the relationship between remittances and social violence by developing a model that predicts that migrants’ remittances lead to the reduction of social violence in the recipient economy under the condition that remittances increase the average product of labour. Using homicide data as an indicator of social violence, we tested our model’s prediction. Controlling for the endogeneity problem with appropriate instruments, we found that remittances tend to reduce social violence. We performed sensitivity analysis on remittances in the empirical specification and found it robust with an unchanged negative sign.     

How do Migration and Remittances Affect Human Capital Investment? The Effects of Relaxing Information and Liquidity Constraints

Abstract

This article explores the heterogeneous effects of the migration–remittance process on the educational attainment of Nepalese children. The results suggest that when controlling for remittances, the children of more educated or informed parents suffer from parental absence, while the children of less informed parents gain from migration, implying that the migration experience helps less educated parents estimate the value of and returns to education more precisely. The results also suggest that remittances help severely credit-constrained households enrol their children in school and prevent dropouts. These remittances help households that face less severe liquidity constraints increase their investment in quality education.     

The shadow value of migrant remittances,income and inequality in a household‐farm economy

This article offers econometric evidence that income remittances sent home by family migrants stimulate household‐farm incomes indirectly by relieving credit and risk constraints on household‐farm production. A high but unequally distributed shadow value of migrant remittances appears to reinforce an equalising direct effect of remittances on the income distribution across a sample of household‐farms in rural Mexico.     

Gender and rural livelihoods in Kenya

This article considers the implications for gender relations of different rural livelihoods. While many rural areas in Kenya have been drawn into intensive commercial production, others, formerly dependent on remittances from migrant labour, have seen these diminish. Recent empirical studies of gender and livelihoods in Kenya are compared. Commercial production and the drying up of remittances set up quite different processes in rural households. These may lead to greater corporateness, to conflict or even to fragmentation. The outcome depends on the potential rewards of co‐operation, but also on domestic authority relations and on ideologies of common or divided interest.     

Remittances and Working Poverty

Abstract

This article shows that the level and the predictability of remittances reduce working poverty in receiving economies through their effects on labour market dynamics. It takes advantage of the new cross-country dataset (ILO, KILM 7th edition) containing information on the share of individuals working for less than US$2 per day. To identify the main impacts, the article proposes a novel approach to deal with the endogeneity of remittances and migration. In addition, the results are robust to the possible error in measuring working poverty, to the potential attrition bias, and to the presence of various control variables.     

Remitting Behaviour of Nepalese Rural-to-Urban Migrants: Implications for Theory and Policy

This article uses data for Nepal to test contemporary hypotheses about the remitting behaviour and associated motives of rural-to-urban migrants and to consider the likely impact of such remittances on rural development. Possibilities for inheritance, degree of family attachment, likelihood of eventual return to place of origin and family investment in the education of the migrants are found to be significant influences on levels of remittances by Nepalese migrants. However, in Nepal, remittances do not seem to result in long-term capital investment in rural areas and so may not promote long-term development of these areas.     

The role of urban‐to‐rural remittances in rural development

One of the effects of rural‐to‐urban migration is the return of money and resources by the migrants to their respective home areas. Recently, it has been argued by several authors that such remittances represent a significant means for removing supply constraints to improved productivity in agriculture. In this paper the authors examine critically the available evidence on the rural impact of remittances. Subjects covered in the paper include the extent of the urban‐to‐rural remittances, the determinants of such financial flows and the use made in the rural areas of the money received. The paper concludes there is little evidence that urban‐rural remittances have been a significant means to rural economic development.     

Remittances in Nepal: Boon or Bane?

Nepal is one of the highest recipients of remittances (percentage of GDP) in the world. For a small land-locked economy battered by a decade-long Maoist insurgency (1996–2006), prolonged political instability, slow growth rate and large exodus of youths for employment overseas, high inflow of remittances bears a huge significance both at micro and macro levels. Exploring various facets of high migration and remittances, this article shows remittance-induced Dutch disease effects and policy laxity to improve investment climate in Nepal. Since it is costly to sterilise the impact of remittances each year, it might be prudent to learn to live with it and gradually channel remittances to productive usages with a goal to boost productivity.     

Collective Remittances and Transnational Coproduction: the 3 × 1 Program for Migrants and Household Access to Public Goods in Mexico

Migrant hometown associations (HTAs) are mobilizing collective remittances to improve social welfare in their countries of origin. This paper assesses the effect of transnational coproduction of public goods in migrants’ places of origin by studying the 3?×?1 Program for Migrants. The 3?×?1 Program is a national social spending program in which the Mexican local, state, and federal government matches HTAs’ collective remittances to improve public services through cross-border public–private partnerships. The statistical analysis across municipalities that do and do not participate in the 3?×?1 Program shows that coproduction improves citizens’ access to public sanitation, drainage, and water, although not electricity. Moreover, a negative and statistically significant interaction term between 3?×?1 Program expenditures and family remittances reveals a substitution effect: in the presence of transnational coproduction, migrant households are less likely to improve public goods using family remittance resources, but in the absence of 3?×?1 Program participation they continue to improve their hometowns with family remittances. This research offers a theoretical mechanism and supporting empirical evidence of an important kind of intermediary institution improving social welfare in migrant places of origin.     

Aid,Remittances, Medical Brain Drain and Child Mortality: Evidence Using Inter and Intra-Country Data

This article analyses the respective impact of aid, remittances and medical brain drain (MBD) on child mortality using panel and cross-country quintile-level data on respectively 84 and 46 developing countries. Our results show that remittances reduce child mortality while MBD increases it. Health aid also significantly reduces child mortality but its impact is less robust than the impact of remittances. Remittances seem to be more effective in reducing mortality for children belonging to households from the upper classes, whereas neither a pro-poor nor anti-poor effect is found for health aid.