Migration, remittances, poverty, and human capital : conceptual and empirical challenges

Abstract

***This paper reviews common challenges faced by researchers interested in measuring the impact of migration and remittances on income poverty, inequality and human capital (or, in general, "welfare") as well as difficulties confronting development practitioners in converting this research into policy advice.On the analytical side, the paper discusses the proper formulation of a research question, the choice of the analytical tools as well as the interpretation of the results, in the presence of pervasive endogeneity in all decisions surrounding migration. Particular attention is given to the use of instrumental variables in migration research.On the policy side, the paper argues that the private nature of migration and remittances implies a need to carefully spell out the rationale for interventions. It also notices the lack of good migration data and proper evaluations of migration-related government policies.The paper focuses mainly on microeconomic evidence about international migration, but much of the discussion extends to other settings as well.

Impacts of remittances on financial development

“…One of the main aspects of remittances is its impact on remittance-receiving countries. The outflow of migrants and inflow of remittances can affect remittance-receiving countries in a variety of subjects such as brain drain (Faini (2007); Bollard et al (2011)), poverty and inequality (Barham and Boucher (1998); Adams and Page (2005)), human capital and labor supply (Sasin and McKenzie (2007); Azizi (2018); Lopez et al (2007)), and financial development, which is the subject of this paper. Also, incentive behind remittances (Yang and Choi (2007), Lucas and Stark (1985), Azizi (2017), Azizi (2019), remittances and information flows (Seshan and Zubrickas (2015); Batista and Narciso (2016)), cost of remittances (Beck and Martinez Peria (2011)), determinants of remittances (Castillo-Ponce et al (2011); Mak Arvin and Lew (2012)), remittances and volatility (Jackman et al (2009)), remittances and industrialization (Asongu and Odhiambo (2019); Efobi et al (2019)), and other miscellaneous impact of remittances on remittance-receiving countries (Karpestam (2012); ) are among other interesting subjects to the researchers in this field.…”

Deforestation and Smallholder Income: Evidence from Remittances to Nepal

“…While the ultimate goal of the migration-to-development strategy would be to actually end the reliance on migration and remittances (Ellerman 2003), it is likely that migration will remain an important income source and livelihood activity for Nepal in the foreseeable future. Policies should make migration and remittances not only "work for development" for instance by encouraging productive investment of remittances (McKenzie and Sasin 2007), but also "work for the environment" and "work for sustainability." Taking fuelwood use as an example, remittances help to reduce households' fuelwood consumption, but the benefits go beyond forest protection.…”

“…Moreover, the question of how to get involved also merits future research in order to inform polices on capitalizing on the win-win linkage. While polices encouraging migration itself might be considered controversial, policies that encourage remittances directly (McKenzie and Sasin 2007) or more productive and environmentally conscious use of remittances seem rational.…”

Latin American Brotherhood? Immigration and Preferences for Redistribution

“…The migration literature has long discussed the potential endogeneity of migrants' location choice (see, for instance, Altonji and Card, 1991;Sasin and McKenzie, 2007). In our case, the main concern is that unobserved factors may affect both immigration and preferences for redistribution.…”