Measuring the Income Effects of Migrant Remittances: A Methodological Approach Applied to Greece

Abstract

I. Introduction There is an ongoing debate on how the often voluminous migrant remittances are used and to what extent they contribute to the development of the migrant's country of origin. There are surveys on how remittance recipients spend their income and discussions on how effective government policies are in attracting remittances. In fact, there is quite a literature, often negative, concerning the contribution of remittances to productive investment. This literature looks at remittances in a variety of ways. Concerning the substance of the inquiry, some of the writers investigate the impact of remittances as a compensating factor for the losses of the human capital invested in emigrants or, in a more general way, as a parameter in the overall impact of migration.' Others discuss the impact of remittances alone, separated from the impact of migration flows.2 From a methodological point of view, some of the theoretical analyses are cast in macroeconomic terms and are based on a tradednontraded goods model, in which labor is exchanged for remittances, whereas capital is i m m~b i l e .~ Other writers examine the welfare effects of remittances alone or jointly with the effects of rnigrati~n.~ Most of this literature, however, focuses on the first round of remittance spending and ignores the diffused multiple effects, thus producing inconclusive evidence on the impact of remittances on the economy .5 There is, in particular, little specific research on how aggregate output and employment are affected, and very limited sectoral and regional investigation of the issue.6 This article attempts a disaggregated sectoral analysis of the income effects of remittances on consumption, production, imports, em

An Exploratory Study of the Use of Migrant Remittances at the Household Level in Barbados

“…Although there was a difference in the two studies regarding the main use of remittances, one factor that was common amongst them was the fact that less than 20% of remittances were used for investment purposes. A later study by Glytsos (1993) showed, in the case of Greece, very similar results to Gilani et al (1981). Oberai and Singh (1980) provided results for the Indian Punjab showing that the majority of remittances to households in this part of India were spent on food and clothing, followed by housing and household goods.…”

Remittances and their impact on Economic Growth

“…Of particular interest is the finding that spending on consumption and investment produced similar multipliers of respectively 1.8 and 1.9. And contrary to common opinion, expenditure on housing was found to be very productive, with a multiplier of 2 (Glytsos [48]). By carrying out an econometric test on data from 11 Central and Eastern European countries, Léon-Ledesma and Piracha [68] found that remittances significantly contribute to the increase of the investment level of the source economies.…”

The Impact of Remittances on Incentives: The Case of Albania

“…Some of the studies that find a positive relationship between remittances and different types of household investments are Taylor (1992), Glytsos (1993), Brown (1994), Adams (1998), Massey and Parrado (1998), Rozelle et al, (1999), McKormick and Wahba (2001), Muent et al, (2001), Dustmann and Kirchkamp (2002), Kule et al, (2002), Taylor et al, (2003), Zarate -Hoyos (2004), Woodruff and Zenteno (2007) and Yang (2007). Other studies argue that remittances are absorbed into immediate consumption so they don't finance productive investments.…”