<p>There are actually more pros then cons for the "home countries" in my opinion, and I have official/credible sources to back this opinion up.</p>

<p>Financial remittances have been recognized as an important developmental vehicle associated with migration. Financial remittance flows have steadily increased in volume from the 1990s to the present day. In 2017, migrants sent an estimated $466 billion to families in developing countries. <strong>Money sent home from abroad is shown to be more stable than both private debt and portfolio equity flows, and several times larger than international development aid.</strong></p>

<p>An estimated 800 million people worldwide are directly supported by remittances from relatives and loved ones abroad, <strong>according to the International Fund for Agricultural Development (IFAD).</strong> <em>Remittances lift families out of poverty, improve health and nutrition conditions, increase education opportunities for children, improve housing and sanitation, promote entrepreneurship and reduce inequality.</em> </p>

<p>However, apart from financial remittances, transnational communities also contribute by way of 'social remittances' - the flow of skills, knowledge, ideas and values that migrants transmit home. <em>The impact of social remittances was most strongly felt in areas such as education, health, employment, business and aspects of governance, <strong>found a study conducted by IOM in Tanzania in 2014</strong>.</em></p>

<p>In short, there is a lot work to be done. IOM, UN Migration Agency, in partnership with specialized organizations, civil society, academia and the private sector, have engaged in several concrete projects and initiatives aimed at improving knowledge of social and financial remittance usage and corridors. They have conducted studies on the impact of remittances on families and communities, and worked to enhance the development impact of remittances, financial inclusion and diaspora engagement. </p>

<p>EDIT to address cons: 
There are indeed cons; let's look at the ones you pointed out:             inflation: I think most people would say this form of inflation is insignificant when you compare it the global economic perspective. There is a literal currency war between most if not all of the worlds nations, going on for a while now, where advanced economies are technically importing inflation to emerging market economies. These amounts are huge and when you factor in our topic here, it makes our topic a bit insignificant in comparison. See: <a href="https://en.wikipedia.org/wiki/Currency_war" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Currency_war</a>
James Rickards also has a great book on the subject.</p>

<p>As for social conflicts, this is a pretty micro oriented con, and a bit political as well. I'm afraid I don't have much knowledge on this one.</p>

<p>For accelerated emigration, this is perhaps the biggest con, but is easily countered in the long run. Here's why: </p>

<p>I think it is commonly accepted that most of the skilled workers <strong>in the long run</strong> wish to return to their home country/their families. When these workers leave their home countries, the country loses the potential GDP input of said workers. What do they gain in return? Cash inflow. Which we already accepted doesn't have much of a significant effect on inflation. What that cash inflow does do is increase consumption and investment a little bit, which promotes the prosperity potential of the country in the long run. Assuming this consumption and investment is aimed at long term growth for the home country, the workers would eventually come back(their original goal in the first place) to a stable economic system(that they inadvertently helped create) and provide further.</p>

CC BY-SA 4.0
2019-06-12T20:43:39.627Z
Thanks for this enlightning answer - even though in another direction than expected. But are there no cons at all - what about those that I tried to formulate, especially inflation and accelerated emigration?
Hans-Peter Stricker
CC BY-SA 4.0
2019-06-12T18:35:47.443Z
2019-06-13T14:17:21.900Z
2019-06-13T14:17:21.900Z
Clinical_Coder
<p>I wonder about the role of migrant workers in a general economic context.</p>

<p>Migrant working appears all over the world and on many time and space scales:</p>

<ul>
<li>around cities (e.g. commuters)</li>
<li>inside countries (more and better paid work in the North than in the South (e.g. Italy) or in the West than in the East (e.g. Germany))</li>
<li>continent wide (e.g. Europe: West-East, North-South)</li>
<li>world wide (e.g. Europe-Africa, North America-South America)</li>
</ul>

<p>Overall, migrant workers who send some money back to their families seem to make use of <a href="https://www.wikiwand.com/en/Arbitrage" rel="nofollow noreferrer">arbitrage</a>, i.e. taking "riskless advantage of price and loan differences". (This doesn't mean that the advantage is effortless: The workers and their families pay the heavy price of being torn.)</p>

<p>But this is not the issue of my question. My question is more general and concerns national economics in general and sustainability.</p>

<p>For the (richer) "host countries" (where the money is earned) the economical effect of sending money out (deflation) may be negligible, but for the (poorer) "home countries" (where the money is sent to) the effect may be significant:</p>

<ul>
<li>inflation (more money than goods)</li>
<li>social conflicts (envy-driven)</li>
<li>accelerated emigration (of workers and experts)</li>
<li>in sum: an economical downward spiral</li>
</ul>

<p>There's just one positive effect that I can imagine:</p>

<ul>
<li>compensation of otherwise economic injustice (by historical or actual reasons)</li>
</ul>

<p>Is there a general opinion about migrant working seen economically from the perspective of the "home countries" (where the money is sent to)? To which extent and how long does this way of economic exchange work? I'd like to learn more about this.</p>

CC BY-SA 4.0
2019-05-31T16:13:37.423Z
I would not call this arbitrage at all. Someone who becomes a corporate lawyer rather than a public a defender for the sake of the salary is not making use of arbitrage.
Giskard
CC BY-SA 4.0
2019-05-31T16:15:20.767Z
"compensation of economic injustice" What do you mean by economic injustice? Could you also clarify/narrow down your questions at the end?
Giskard
CC BY-SA 4.0
2019-05-31T17:22:54.980Z
If I earn 10€ in Germany and transfer it to my family in a much poorer country, it's suddenly worth 100€. That's what I mean with "arbitrage". Do I misuse the term?
Hans-Peter Stricker
CC BY-SA 4.0
2019-05-31T17:25:13.843Z
"Economic injustice": admittedly vague, for historical reasons (colonialism) or actual reasons.
Hans-Peter Stricker
CC BY-SA 4.0
2019-05-31T20:57:11.760Z
Yes, that is not arbitrage. 10€ is worth 10€ everywhere. It may be able to buy more foodstuffs in country A than in country B, but that is not arbitrage, it is difference purchasing in power. If there are absolutely no barriers to trade, e.g. 0 cost for instantaneous transport, then such a difference would also result in arbitrage.
Giskard
CC BY-SA 4.0
2019-05-31T20:59:42.740Z
But I think you are simply thinking of difference in wages, i.e. it is possible to earn more in country A than in country B.
Giskard
CC BY-SA 4.0
2019-06-02T23:33:00.983Z
https://en.wikipedia.org/wiki/Remittance#Economic_benefits_for_developing_countries
fantastic peace and prosperity
CC BY-SA 4.0
2019-06-03T07:41:52.197Z
@Fizz: Thanks for the helpful link. I didn't know the technical term "remittance", otherwise I would have found this page by myself. The article explains a lot, but seems to have a stronger focus on the volumes and positive effects of remittance. My questions is more about the negative effects.
Hans-Peter Stricker
CC BY-SA 4.0
2019-06-03T07:44:45.460Z
@Giskard: Concerning your first comment, I believe the analogy is not sound. Migrant workers don't decide to do a genuinely *different* (and better paid) job (like corporate lawyer vs. public defender), but to do the *same* job in a different country (where it is better paid), taking (among other things) advantage of regional salary differences..
Hans-Peter Stricker
CC BY-SA 4.0
2019-06-03T14:03:07.343Z
I will give you a two euro coin for a one euro coin anytime during the next week. (Emphasis on the money being physical coins and the offer being limited to one trade.) Is this arbitrage? If it is, you will likely take advantage of it and travel to my location.
Giskard
CC BY-SA 4.0
2019-06-03T14:23:30.350Z
No, I will spend the two euro coins to buy two loaves of bread for my family (contributing to deflation, and taking advantage of price level differences, because my son, who sent me the two euros can still survive).
Hans-Peter Stricker
CC BY-SA 4.0
2019-06-05T07:42:36.333Z
there is a large literature on various effects of remittances on economic outcomes in recipient countries. Just type "remittances" in google scholar and check out the auto-completion
E. Sommer
CC BY-SA 4.0
2019-06-08T12:20:52.070Z
"Is there a general opinion about migrant working seen economically from the perspective of the "home countries" (where the money is sent to)? To which extent and how long does this way of economic exchange work? I'd like to learn more about this." I think your question is unfortunately vague, to the degree that it is not clear it can be given a precise and satisfying answer. Perhaps you can refine it?
Arthur Small
CC BY-SA 4.0
2019-06-14T16:04:34.437Z
Diego Vacaflores has some research in this area. Look for his papers.
123
<macroeconomics><microeconomics><migration>
Remittance: Migrant workers sending money to their families
Hans-Peter Stricker
# Remittance: Migrant workers sending money to their families

(Asked by: username_0 on 2019-05-31)

I wonder about the role of migrant workers in a general economic context.

Migrant working appears all over the world and on many time and space scales:

* around cities (e.g. commuters)
* inside countries (more and better paid work in the North than in the South (e.g. Italy) or in the West than in the East (e.g. Germany))
* continent wide (e.g. Europe: West-East, North-South)
* world wide (e.g. Europe-Africa, North America-South America)

Overall, migrant workers who send some money back to their families seem to make use of [arbitrage](https://www.wikiwand.com/en/Arbitrage), i.e. taking "riskless advantage of price and loan differences". (This doesn't mean that the advantage is effortless: The workers and their families pay the heavy price of being torn.)

But this is not the issue of my question. My question is more general and concerns national economics in general and sustainability.

For the (richer) "host countries" (where the money is earned) the economical effect of sending money out (deflation) may be negligible, but for the (poorer) "home countries" (where the money is sent to) the effect may be significant:

* inflation (more money than goods)
* social conflicts (envy-driven)
* accelerated emigration (of workers and experts)
* in sum: an economical downward spiral

There's just one positive effect that I can imagine:

* compensation of otherwise economic injustice (by historical or actual reasons)

Is there a general opinion about migrant working seen economically from the perspective of the "home countries" (where the money is sent to)? To which extent and how long does this way of economic exchange work? I'd like to learn more about this.

**Tags:** macroeconomics, microeconomics, migration

> **Comments:**
> **username_1**: I would not call this arbitrage at all. Someone who becomes a corporate lawyer rather than a public a defender for the sake of the salary is not making use of arbitrage.  
> **username_1**: "compensation of economic injustice" What do you mean by economic injustice? Could you also clarify/narrow down your questions at the end?  
> **username_0**: If I earn 10€ in Germany and transfer it to my family in a much poorer country, it's suddenly worth 100€. That's what I mean with "arbitrage". Do I misuse the term?  
> **username_0**: "Economic injustice": admittedly vague, for historical reasons (colonialism) or actual reasons.  
> **username_1**: Yes, that is not arbitrage. 10€ is worth 10€ everywhere. It may be able to buy more foodstuffs in country A than in country B, but that is not arbitrage, it is difference purchasing in power. If there are absolutely no barriers to trade, e.g. 0 cost for instantaneous transport, then such a difference would also result in arbitrage.  
> **username_1**: But I think you are simply thinking of difference in wages, i.e. it is possible to earn more in country A than in country B.  
> **username_2**: https://en.wikipedia.org/wiki/Remittance#Economic_benefits_for_developing_countries  
> **username_0**: @Fizz: Thanks for the helpful link. I didn't know the technical term "remittance", otherwise I would have found this page by myself. The article explains a lot, but seems to have a stronger focus on the volumes and positive effects of remittance. My questions is more about the negative effects.  
> **username_0**: @username_1: Concerning your first comment, I believe the analogy is not sound. Migrant workers don't decide to do a genuinely *different* (and better paid) job (like corporate lawyer vs. public defender), but to do the *same* job in a different country (where it is better paid), taking (among other things) advantage of regional salary differences..  
> **username_1**: I will give you a two euro coin for a one euro coin anytime during the next week. (Emphasis on the money being physical coins and the offer being limited to one trade.) Is this arbitrage? If it is, you will likely take advantage of it and travel to my location.  
> **username_0**: No, I will spend the two euro coins to buy two loaves of bread for my family (contributing to deflation, and taking advantage of price level differences, because my son, who sent me the two euros can still survive).  
> **username_3**: there is a large literature on various effects of remittances on economic outcomes in recipient countries. Just type "remittances" in google scholar and check out the auto-completion  
> **username_4**: "Is there a general opinion about migrant working seen economically from the perspective of the "home countries" (where the money is sent to)? To which extent and how long does this way of economic exchange work? I'd like to learn more about this." I think your question is unfortunately vague, to the degree that it is not clear it can be given a precise and satisfying answer. Perhaps you can refine it?  
> **username_5**: Diego Vacaflores has some research in this area. Look for his papers.  

---

## 1 answers

### Answer by username_6 on 2019-06-12. Score: 1 | Accepted answer

There are actually more pros then cons for the "home countries" in my opinion, and I have official/credible sources to back this opinion up.

Financial remittances have been recognized as an important developmental vehicle associated with migration. Financial remittance flows have steadily increased in volume from the 1990s to the present day. In 2017, migrants sent an estimated $466 billion to families in developing countries. **Money sent home from abroad is shown to be more stable than both private debt and portfolio equity flows, and several times larger than international development aid.**

An estimated 800 million people worldwide are directly supported by remittances from relatives and loved ones abroad, **according to the International Fund for Agricultural Development (IFAD).** *Remittances lift families out of poverty, improve health and nutrition conditions, increase education opportunities for children, improve housing and sanitation, promote entrepreneurship and reduce inequality.*

However, apart from financial remittances, transnational communities also contribute by way of 'social remittances' - the flow of skills, knowledge, ideas and values that migrants transmit home. *The impact of social remittances was most strongly felt in areas such as education, health, employment, business and aspects of governance, **found a study conducted by IOM in Tanzania in 2014**.*

In short, there is a lot work to be done. IOM, UN Migration Agency, in partnership with specialized organizations, civil society, academia and the private sector, have engaged in several concrete projects and initiatives aimed at improving knowledge of social and financial remittance usage and corridors. They have conducted studies on the impact of remittances on families and communities, and worked to enhance the development impact of remittances, financial inclusion and diaspora engagement.

EDIT to address cons:
There are indeed cons; let's look at the ones you pointed out: inflation: I think most people would say this form of inflation is insignificant when you compare it the global economic perspective. There is a literal currency war between most if not all of the worlds nations, going on for a while now, where advanced economies are technically importing inflation to emerging market economies. These amounts are huge and when you factor in our topic here, it makes our topic a bit insignificant in comparison. See: <https://en.wikipedia.org/wiki/Currency_war>
James Rickards also has a great book on the subject.

As for social conflicts, this is a pretty micro oriented con, and a bit political as well. I'm afraid I don't have much knowledge on this one.

For accelerated emigration, this is perhaps the biggest con, but is easily countered in the long run. Here's why:

I think it is commonly accepted that most of the skilled workers **in the long run** wish to return to their home country/their families. When these workers leave their home countries, the country loses the potential GDP input of said workers. What do they gain in return? Cash inflow. Which we already accepted doesn't have much of a significant effect on inflation. What that cash inflow does do is increase consumption and investment a little bit, which promotes the username_2 potential of the country in the long run. Assuming this consumption and investment is aimed at long term growth for the home country, the workers would eventually come back(their original goal in the first place) to a stable economic system(that they inadvertently helped create) and provide further.

> **Comments:**
> **username_0**: Thanks for this enlightning answer - even though in another direction than expected. But are there no cons at all - what about those that I tried to formulate, especially inflation and accelerated emigration?  

---

