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Over-documented, but still glimpsing fear at the border

Christian Eigen-Zucchi's picture

I have a UN Laissez Passe.  I have a German Passport.  I have a US Passport.  And, I am enrolled in the Global Entry trusted traveler program in the US.  Yet, for the second time in a row, and perhaps the third or fourth time over the past couple of years, I have had the pleasure of extra screening upon exiting Dulles International Airport in Washington, DC.  I am shepherded to a separate and over-crowded room.  I show my passport and Global Entry customs declaration form.  The officer takes these from me and asks me to have a seat and wait until I am called. 

How Remittances Grease the Wheels of Bangladesh’s Economy

Zahid Hussain's picture

What impact do remittances have on stimulating overall economic growth? Remittances can be used for consumption and investment which further stimulates demand for goods and services, as well as contribute to financial development. On the other hand, they can create dependence in recipients and cause real exchange-rate appreciation which adversely affects domestic production.

The answer is an empirical one which we can answer using available data. Our findings echo recent economic research which shows that remittances, even when not invested directly, can have an important multiplier effect.

In our study, we focused only on the magnitude of the impact of remittances on aggregate demand in Bangladesh and calculated the traditional Keynesian multiplier effect, that is how much income is generated from every remittance dollar, following the approach adopted by Nicholas Glytsos by estimating a consumption function, an investment function, and an imports function. To estimate the parameters we used data from the Bangladesh Bureau of Statistics national accounts covering the period 1981-2010. We ran simple Ordinary Least Squares regressions to estimate the structural parameters. Here is a summary of our results:

What Drives Remittances of Bangladeshi Migrants?

Zahid Hussain's picture

Why do migrants send money back home? Distinguishing the different motives helps us understand the role these transfers play in influencing the behavior of households, and the policy implications of alternative motives can be very different.

I tried answering this question using micro survey data from Bangladesh on possible motivations, using a multivariate regression model.

The results were a little unexpected. Overall, the evidence contradicts the argument that remittance-receiving countries have little scope for policy intervention. The analysis shows that remittances are not driven exclusively by the need for family support but also by the migrants’ skill and education level and motivation to transfer their savings as investment in their home country. Thus, contrary to conventional wisdom, remittances play a vital role in not only supporting consumption but also in serving as an important source of investment funding. The extent to which remittances contribute to investment depends on the supportiveness of government policies and whether the economic environment is conducive to investment activity.

Surprisingly, none of the demand side variables—the existence of a surviving parent or spouse—seem to matter. Among the supply side variables, education and skill matter most.

How can we cut the high costs of remittances to Africa?

Massimo Cirasino's picture

Read it in French, Spanish or Mandarin.

Migrant workers, earning money in jobs far from home, sent more than $400 billion to their families back home in 2012. Such remittances remain a vital source of income for millions of people in developing countries: Food, housing, education, health care and more are paid for every day by workers who earn money abroad. Through a simple and repetitive transaction – sending money home – those workers are really sending heart-warming feelings like hope for a better future and love of family.

For Bangladesh, More Migrants Mean More Money

Zahid Hussain's picture

Remittances sent by migrant workers have emerged as a key driver of poverty reduction in many developing countries. Bangladesh has caught up with growing migration trends since the mid-70s when only 6,000 Bangladeshis were working abroad. Today, there are about 8 million. Migration has now become a major source of gainful employment for Bangladesh’s growing number of unemployed and under-employed labor force. The sharpest increase in the level of manpower exports occurred during 2006--2009. Remittances have grown at a rapid pace, particularly since 2004.

So, what are the key correlates of aggregate remittance inflows in Bangladesh? What does the data tell us about Bangladesh? Many researchers have used aggregate data to analyze the macro-economic factors affecting the behavior of remitters. For example, Barua et al (2007) show that income differentials between host and home country and devaluation of home country currency positively and high inflation rate in home country negatively affect workers’ remittances1. Hasan (2008) finds remittances respond positively to home interest rate and incomes in host countries2. Ordinary Least Squares estimation is frequently used to characterize the statistical relationships between aggregate remittance inflows and their proximate macro correlates.

The key finding is that a limited number of macroeconomic factors are important in predicting the behavior of aggregate remittances.

Milanovic on Inequality (Continued): Implications for Politics, Alliances and Migration

Duncan Green's picture

In which, following on yesterday’s post,  Ricardo Fuentes and I decide to carry on chatting about the new Milanovic paper on inequality.

Duncan: Great intro to the Milanovic paper, Ricardo, but there’s plenty more juice to be had, I think. First let’s take a closer look at the graph you put up of change in global real income 1988-2008 (below). As well as the spike of the top 1% (and do we know whether the financial crisis has moderated or amplified the spike?), the bit that jumps out at me is the stagnation of incomes above the 75th percentile. For that portion of the world’s population in the top quarter of the income bracket, but below the super-rich 1%, the last 20 years have been pretty terrible.

Migration and post-2015 development goals

Dilip Ratha's picture

On the eve of the international migrants day, many people are debating how migration might feature in the post-2015 development goals. There is no doubt that migration - international and internal - affects several of the current MDGs: poverty, education, health of children and mothers, environment, gender, and also several elements of a global public good such a role in financial and natural crisis. Migration directly impacts the migrants, their families and their employers, and also impacts development indirectly. Development in turn impacts migration. There is no doubt that migration is a very important driver of development. And yet, since it directly challenges national identity and sovereignty, it is not easy to arrive at a consensus on specific migration targets.

Gangnam Migration: Regression-Discontinuity Impacts of Migrating to Korea

David McKenzie's picture

Several countries around the world (notably Australia and Canada) have migration points systems- score above some points threshold and you can come in, score below and you can’t. This has intrigued me with the possibility of a regression-discontinuity design to measure impacts of migrating. However, there are several problems – the points given tend to be lumpy (e.g.