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February 2013

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.

Creating Jobs by Improving Human Capital

Mary Hallward-Driemeier's picture

Students in a technical education program supported by the World Bank in Antioquia, Colombia. Photo: © Charlotte Kesl / World Bank

Figuring out how to expand job creation is a priority for policy makers around the globe, not just in the short run but also in the longer run. A big reason why is that providing opportunities for people to earn more income is only part of the agenda. Expanding productivity also ensures the more efficient use of resources and enables growth. The question of how best to achieve these goals was discussed at the recent LACEA (Latin American and Caribbean Economic Association)–LAMES (Latin American Meeting of the Econometric Society) conference in Peru (Nov. 1–3). The JKP interviewed four prominent researchers, all of which made a strong, if somewhat different, case for the need to strengthen human capital, especially in Latin America.

Stories of Transformation: Rural Roads of Rajasthan

Vinita Ranade's picture

In the dry, rugged landscape of Rajasthan, children faced a hot and dusty trek to school, families had a hard time reaching medical help, and farmers, most of whom rely on dairy farming for their livelihood, found it difficult to take their milk to market.

With the coming of the road, farmers earnings have increased, children can get a ride to school, and medical help is reachable more quickly. With the commute to town now being easier, city jobs are within reach, and families are receiving better marriage proposals for their sons and daughters.