where the public healthcare system is not able to provide adequate treatment or preventive care. In Sri Lanka, the children in remittance-receiving households have a higher birth weight, while migrant surveys in Latin America show that an important motivation for remittances is to cover health expenditures (World Bank, 2006). There is also evidence to suggest that the better housing conditions enabled as a result of remittances may have a positive impact in reducing infant mortality through improving access to public services or by allowing mothers to stay at home and care for their children. Notwithstanding these encouraging outcomes, it should be noted that the impact of migration on the health of children left behind is often not straight- forward. The health impact of absenteeism of one of the parents can be negative and migration has been linked with a lower measure of preventive healthcare such as vaccinations. In such cases, remittances serve to ameliorate or offset this disruptive effect of migration. Hence, recent research shows that infant mortality across a number of Mexican municipalities falls in line with an increase in the percent of remittances-receiving households (Lopez-Cordova, 2006). From another angle, the exports of doctors and nurses may also affect the availability and quality of medical services in migrant source countries. This has been particularly acute in the Philippines where the large levels of migration of nurses have been argued to have led to the closure or scal- ing down of a number of hospitals (Conde, 2006). While these effects may not be as severe in all cases, there is nevertheless a need to take into account these factors when assessing the overall impact on health of migration.
Income level and income shocks are other relevant factors that affect the crime rate. Mocan and Unel (2011) estimate that a decline in unskilled workers’ earnings increases crime at the state level in the United States. Bignon, Caroli, and Galbiati (2011) present evidence that a large negative income shock in the 19th century in France increased property crime. Although remittances sent by family members abroad are an important source of household income in many countries of the LAC region, their impact on crime has largely been unexplored. Corbacho and Ruiz (2013) study the determinants of crime in the region and test new variables, such as the distance between countries, the drug trade, criminal deportees, and remittances. They find that remittances are associated with a lower rate of homicides, and argue that remittances could reduce crime if they compensate for the lack of income of the vulnerable population in the country of origin. But, why would remittances reduce crime? What are the mechanisms?
Overall, the obtained results corroborate those obtained by Chami et al. (2003) for whom the transfers have a global negative effect on labor supply. Our results show that this negative effect is mainly found among women. The results of the estimation of models (4) and (5) are reported in Table 5. The results show that remittances reduce the fertility rate very significantly (-0.019).While in the case of the level of accumulation of human capital, the impact is not significant. This leaves once again some ambiguity regarding the ability of transfers to create incentives for schooling. Migration of household head would disrupt family life and the possibility of joining the head of household deters investment in education. Many empirical studies corroborate this finding (McKenzie, 2005; Taylor and Mora, 2006; Özden and Schiff, 2006).
In methodology we will discuss the objectives set out above for remittance and its impact on Economic Growth in Kosovo during the years 2008 - 2013 so the goal in this research is not only to know facts and to understand reports of the phenomena in this area of research, but the goal is "to operate and understand more than we have done previously in this area", by (Bell, 2005 p.28). The data used for methodology in this research publication are collected from official economic and financial institutions in Kosovo from 2008 - 2013 (such as: Central Bank of Kosovo and Kosovo Agency of Statistic) as well as International institutions (such as: World Bank Development Indicators). In this research publication multiple regression analysis is used to find the relationship between variables that are included in the analysis therefore as a dependent variable is Economic growth and as independent variables are: remittances, inflation rate and exchange rate (REER).
The empirical speci…cation essentially examines how changes in the total amount of remittances leaving a German state a¤ect the wages of individual native workers within that state after controlling for demographic characteristics, state …xed e¤ects, year …xed e¤ects, and industry …xed e¤ects. One concern is that an income or productivity shock within a particular state could lead to higher native wages and lead to wealthier immigrants remitting more money abroad. To address this potential endogeneity concern, this analysis utilizes an instrumental variable estimation strategy to identify the casual impact of remittance on wages. The instrument is constructed using variation in remittances that is driven by changes in foreign country characteristics which are exogenous to local economics conditions. The results con…rm the predictions of the model. Even the OLS results, which may include a spurious positive bias due to endogeneity, indicate that remittances decrease na- tive wages. The IV results are more negative and indicate that, a ten percent increase in remittances leads to a 2.5 percent reduction in the wages of native workers within that state. As the consumer base shrinks relative to the workforce, native wages decline. In addition, this negative impact predominantly a¤ects workers employed in non-traded in- dustries which are more reliant on domestic consumption. The impact of remittances on workers in traded industries is insigni…cant because changes in the local consumer base has a relatively small impact on the demand for these goods and remittances set abroad can
To find the long run relationship among poverty, remittances, income inequality and real GDP, test the hypothesis that the coefficients of lag variables are equal to zero based on the redundant variable test. Results of cointegration test are presented in panel (C) of table 3. The results suggest that the null hypothesis of no long run relationship is rejected, because the computed F-statistics is highly significant. This implies that the long run relationship exist among poverty, remittances, real GDP and income inequality. We get the long run coefficients by normalizing the level explanatory variables and results reported in panel (D) of table 3. The results suggest that an increase in remittances can directly lead to poverty reduction in the long run. This may be due to the fact that remittances directly increase the income of poor people, smooth household consumption and ease capital constraint. The short run impact of remittances on poverty is negative which might be due to the transaction cost associated with migration. The long run elasticity of poverty with respect to income inequality (Gini coefficient) is positive and significant which is according to expectation. This positive and significant relation indicate that at a given rate of economic growth, poverty reduces more in low inequality countries, as opposed to high inequality countries, so the income inequality variable is positive and significant (Adam and Page, 2005). Long run poverty elasticity with respect to real GDP is positive and significant which is consistent with economic theory. The magnitude of the coefficient of long run variable is consistent with analysis of poverty reduction (Adam and page, 2005).
Remittance is claimed to help reduce poverty as most of this fund is used as income support of the recipient families; often these are poor households in the home countries. In view of that, remittances also help to reduce the income gap in the country of origin (Admas, 1989; Barham & Boucher, 1998; and Docquier & Rapoport, 2003). Besides, Quartey and Blanson (2004) noted that the remittance inflows to Ghana increased during the economic shocks and it helped to reduce the adverse impact of economic shocks on household welfare. In addition, some statistical evidences showed that the remittances have improved the purchasing power on consumption goods (Stahl & Habib, 1989 and Glytsos, 1993) as well as the investment in properties (Durand et al, 1996).
Vikram (2005) examine the different channels through which remittances can affect economic activity. The study does not clearly support the short term stabilizing effect on consumption, however the longer term economic effect of such flows seems to be ambiguous. Catrinescu (2006) explored that remittances exert a weakly positive impact on long term macroeconomic growth. Furthermore the study also supports the idea that development impact of remittances enhances in the presence of sound macroeconomic policies and institution.
Workers’ remittances (repatriation of immigrant earnings) from overseas countries to home countries become one of the most important sources of financing capital in the developing countries. According to the World Bank Report (2006), worldwide remittances flows accounted for $68 billion in 1990, but total remittances have been increased to $232 billion in 2005. Furthermore, (World Bank, 2011a, 2011b) reported that “remittances now account for more than two and a half times the global level of Official Development Assistance (ODA).” As of today, workers’ remittances constitute the important source of foreign income for developing countries. Lartey (2013, p. 1038) pointed out the importance of global remittances by noting that “they currently represent about one-third of total financial flows to the developing world”. Thus, a series of recent studies started to pay attention to the impact of workers’ remittances on receiving country’s economic growth through capital accumulation or other mechanisms. On one side, some researchers have proved the evidence that high levels of remittances are associated with lower poverty and high growth rates (Adams and Page 2005; Acosta et al. 2008). Some other researchers argued that high level of remittances inflows lead to higher human capital investments and reduce fluctuations in consumptions and cause economy stability (Gupta, Patillo and Wagh 2009). Still some other studies have claimed that high level of remittances may enhance the underdeveloped financial system in developing countries by mitigating the credit constraints and thus affect capital accumulations and economic growth positively (Woodruff and Zenteno, 2007; Lartey, 2013).
Arif (2012) investigate the importance and impact of remittances on economic growth and poverty reduction in Pakistan. Study found that benefits are associated with international migration of labor class in developing countries. Remittances create positive impact on social and economic growth in developing countries. Due to unemployment in developing countries the highly skilled labor migrates to develop countries to earn foreign currency and send that money to their home and to their country. Remittances helps to increase the capital inflows from 1075 $ million in 2000 to 6000 $ million in 2007 that helps to stabilize the exchange rate, poverty reduction, increase foreign exchange reserves and lower current account deficit. Study also finds that personal remittances help to improve educational as well as health system. Families of migrants spend their income for consumption purpose, for better life style purpose. Highly qualified and healthy society will increase the human capital in country that helps in economic growth.
Table 5 above showed the Impact of Remittances and household frequency of feeding. The emphasis here is on the quality of feeding was measured with the number of times household members could have meals that contain fish, meat, or egg in a week prior to the period they started receiving remittances from household member residing abroad. Having the ability to have the good meal for at least twice a day which amounted to fourteen times in a week was operationalized as their benchmark for quality household feeding. It was found that the majority (about 85%) of the households that participated in this study were able to have good meals at least fourteen times in a week (Table 5). Thus, only about 10.5 percent affirmed that they were unable to have more than fourteen good meals (with fish, meat or eggs) in a week. It could therefore be suggested that remittances receiving households in Benin metropolis were able to relatively consume quality food even before they started receiving migrants’ remittances. Reasons for this finding could not be far from the anecdotal evidence that food is comparatively cheap in around Benin metropolis due to the large involvement of virtually all the residents in both subsistence and commercial farming.
This thesis extends the existing literature by identifying the contribution of migrant remittances on economic growth in ASEAN. The main purpose of this thesis is to find the impact in seven of the countries in the Association of Southeast Asian Nations, using panel data for the time period from 1980 to 2012, including a set of control variables. Statistics from the United Nations show that there are about 214 million international migrants, which constitutes roughly 3 % of the world’s population (IOM, 2013), and these migrants remit an enormously amount of money back home. The flows of remittances in the world have rapidly increased in the last couple of decades. In 1990 the amount was estimated to be US$ 67,8 billion. This number was doubled during in the next ten years, amounting to US$ 135,5 billions in 2000.
The Keynesian model is the oldest attempt to capture the short-run macroeconom- ic impact of international transfers on output. The model, under the assumption of sticky prices, fi xed exchange rate, interest rate and the absence of supply constraints postulates that distortions or shocks to the economy on demand side have a dispro- portionate effect on national output. the theory further argues that the magnitude of these shocks on national output would depend on Keynesian multiplier (which, itself, depends on several parameters such as the marginal propensity to import), and on the size of the transfer shock (which itself depends on the amounts received and on the recipients’ marginal propensity to consume remittances as a constituents of the agents’ expectations regarding future income streams. Based on this rationale, Glytsos (2005) developed a Keynesian type macroeconomic model to estimate the demand effect generated by remittances on consumption through disposable income. He found a positive and signifi cant relationship between income, consumption and imports. In a similar vein, using annual data on Egypt for 1967-91, El-Sakka and Mc- Nabb (1999) found that imports fi nanced through remittances have very high income elasticity, implying that remittances may have low multiplying effects.
The general conclusion of these studies suggest that remittances have positive effects on economy of Bangladesh in terms of aggregate consumption, investment, reduction in current account deficit, external debt burden and improve education/skills of the households. WREMI also play an important role in human capital investment in the recipient country through relaxing resource constraints. Cattaneo (2005) found that remittances are typically spent on investment in physical assets as well as investment on human capital such as education and health, which promotes growth. Jongwanich (2007) examined the impact of workers‘ remittances on growth and poverty reduction in developing Asia-Pacific. The results suggest ed that, while workers‘ remittances have a significant impact on poverty reduction through increasing income, smoothing consumption and easing capital constraints of the poor, but they have marginal impact on growth working through domestic investment and human capital development. Kumar (2010) investigate the relationship between remittance inflow and economic growth of the Philippines by using the Bounds test analysis. They find that remittances have positively affected economic growth. Calero (2008) explored that remittances increases school enrollment and decrease the extent of child work. Moreover the study finds that remittances are used to finance education when households are facing aggregate shocks as these are associated with increased work activities. International remittances also perform an important role in reducing the extent of inequality and poverty.
The paper proceeds in eight further parts. Section 1 presents the data. Since the problems of selection and identification are so important, Section 2 presents the three-stage nested logit model and discusses the various identification issues involved in estimating this model. Section 3 estimates the selection model using an instrumental variables approach, employing variations in historical distance to the nearest railroad station and changes in rainfall patterns. Section 4 estimates the selection-corrected predicted and counterfactual expenditure functions, and Section 5 uses these expenditure functions to analyze the impact of international remittances on poverty and inequality in Indonesia. Section 6 presents the model for comparing the marginal spending behavior of remittance and non-remittance receiving households, and Section 7 presents the results of this model. Section 8 concludes.
Remittances have two main theoretical approaches; family approach and portfolio approach. The family approach is when altruistic reasons ginger immigrants to send money back home to subsistence on the part of their family. The portfolio approach is the propensity of remitters to invest in their home countries. These two approaches affirm that remittances propel economic growth and development by the tendency it has to increase consumption and production (OECD, 2006). There have been divided arguments on the effect of remittances on economic growth. Zizi (2014) studied remittances as an economic development factor in CEE countries and concluded that remittances have a positive effect on economic growth. Moreover, Uwaoma and Michael (2015) assert that remittances affect economic growth when it is estimated simultaneously in their study of the impact on FDI, foreign aid and remittance on economic growth in 53 African countries and 34 Latin American and Caribbean countries. Some studies have the conviction that remittances inflows go to the deprived, impoverish and poor families who have relatives abroad hence reduces the level of poverty and income inequality, also as remittances are considered as the second largest inflow of funds into an economy, it tends to act as a source of funding or capital to create and support higher employment, also contribute to the defraying of current account deficit; therefore, it has a positive effect on economic growth and development (Quibria, 1997; Taylor, 1999; Lowell and De La Garza, 2000; Daianu, 2001; Leon-Ledesma and Piracha, 2001:2004; Adams and Page, 2003; Docquier and Rapoport, 2003; Ratha, 2003; Terry et al., 2004; Mundaca, 2009; Bugamelli and Paterno, 2011; Zizi, 2014; Uwoema and Michael, 2015, Dietmar and Adela, 2017; Calin-Adrian et al., 2018, Keshmeer, 2018, Olayungbo and Ahmod, 2019). A section of researchers are of the view that affluent families have the capability of paying the cost involved in emigration and are the people who benefit from remittances, therefore remittances do not benefit the poor to emancipate them from economic hardships. Again, some studies found a negative effect and mixed results of remittances on economic growth (Barajas et al., 2009; Rao and Hassan, 2012; Gijini, 2013).
In each case, investment came out to be endogenous whereas remittances came out to be endogenous for the ‘less open’ country group in the case of Import/GDP (P-value = 0.00, Wu-Hausman F test and Durbin-Wu- Hausman chi-square test). Hansen J test signiﬁes that the instruments used in the GMM estimation are valid and none of the models seem to suﬀer from autocorrelation bias. As far as the impact of remittances is concerned, results are pretty similar across the three estimations. Remittances seem to aﬀect growth positively in the ‘more open’ countries and this result is robust across diﬀerent estimation methods and diﬀerent trade volume indi- cators. Conversely, the eﬀect of remittances is statistically insigniﬁcant and fragile for the ‘less open’ groups; sometimes the coeﬀicient on this variable even takes a negative value. Table 6–Table 8present the econometric ﬁndings when we use FDI, trade barrier and exchange rate distortions as the openness indicator respectively.
Remittances have been and remain of great relevance for socio-economic development of the country, as they constitute an important source of financial resource. The aim of this article is to assess the impact of remittances, transfer channels and other aspects, with reference to Kosovo. Existing data show that since 2005 there has been a significant and continuous growth of remittances: in 2005 remittance flows were recorded at 418 million Euros, reaching up to 772 million Euros in 2015. Remittances are mainly sent to support families in Kosovo. Main investment destination sectors of remittance senders are construction, accounting for 47.2 percent of total investment value.
Remittances by the Pakistani diaspora abroad have had a far reaching impact on the economy and indeed the broader socio-economic milieu. Studies on the impact of remittances have not differentiated between the impact of flow of remittances through formal and informal channels. The question posed in this paper is whether remittances through informal channels have a greater impact on domestic consumption and identifies conditions under which this impact is greater when sent through formal channel.
The potential role that workers’ remittances are likely to play in promoting economic growth, especially in Arab countries, is currently attracting considerable attention. These remittances have an impact on the remitting economies as well. The Gulf region is considered one of the top sending countries of migrant remittances. In this study, empirical analysis is carried out with panel techniques using data over the last three decades for six Arab countries. Our results show that migrant remittances have a positive and significant impact on economic growth. This relationship is also significant when we use dynamic panel data. An indirect effect of remittances on economic growth is pointed out especially via the investment and the household final consumption expenditure channels.