• Migrant remittances
• Country impacts
  • Country impacts
  • Recommended reading
• Women migrants and remittances
• Sending remittances home

Migrant remittances

This report explores the gains and losses from international migration from the perspective of developing countries, with special attention to the money that migrants send home. The report also considers policy initiatives that could improve the developmental impact of migration, with particular attention to remittances.

Research findings include:

• economic gains from migration which accrue to migrants and their families are often large. Migrants, however, incur substantial costs, including psychological costs, and immigrants, particularly irregular migrants, sometimes run high risks and many suffer from exploitation and abuse
• destination countries can receive significant economic gains from migration, for example, increased availability of labour boosts returns to capital and reduces the cost of production; high-income countries may benefit from increased labour-market flexibility, an increased labour force due to lower prices for services such as child care, and perhaps economies of scale and increased diversity. However, some workers may see an erosion of wages or employment, although this effect is found to be small in most empirical studies
• the impact of remittances on growth is unclear, however, remittances do play an important role in reducing the incidence and severity of poverty, although with no significant effect on income inequality. By generating a steady stream of foreign exchange earnings, remittances can improve a country's creditworthiness for external borrowing and, through innovative financing mechanisms they can expand access to capital and lower borrowing costs
• in some countries low-skilled emigration can raise demand for the remaining low-skilled workers (including poor workers) at the margin, leading to some combination of higher wages, lower unemployment, less underemployment, and greater labour force participation
• a well-educated diaspora can improve access to capital, technology, information, foreign exchange, and business contacts for firms in the country of origin. At the same time, large outflows of high-skilled workers can reduce growth in the origin country. Highly educated citizens, if they stayed in their countries, could help to improve governance, improve the quality of debate on public issues, encourage education of children, and strengthen the administrative capacity of the state.

Some key policy implications include:

• public policies could encourage expansion of banking networks, allow domestic banks from origin countries to operate overseas, provide identification cards to migrants, and facilitate the participation of microfinance institutions and credit unions in providing low-cost remittance services
• reducing transaction charges increases the disposable income of poor migrants and increases their incentives to remit, because the net receipts of recipients
• competition among providers of remittance services could be increased by lowering capital requirements on remittance services and opening up postal, banking, and retail networks to nonexclusive partnerships with remittance agencies
• governments could help reduce costs by supporting the introduction of modern technology in payment systems
• regulatory regimes need to strike a better balance between preventing financial abuse and facilitating the flow of funds through formal channels.

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