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How remittances improve living conditions




Migrants’ remittances contribute to improving the living conditions and level of education of recipient families. A study on the impact of short-term migration with an in-depth analysis of the cases of Algeria and Morocco was carried out by FEMISE economists.



Remittances sent by migrants considerably reduce the number of poor households in rural areas. (Photo F. Dubessy)
Remittances sent by migrants considerably reduce the number of poor households in rural areas. (Photo F. Dubessy)
Since 1995, there has been a six-fold increase in remittances towards developing countries, reaching a total of 325 billion dollars in 2010. It is clear that these flows have a great impact on both the economies and the families that receive them.

It explains why the Euro-Mediterranean Forum of Economic Science Institutes (FEMISE) undertook a study, under the guidance of Professor Mouhoud El Mouhoud, who teaches at Paris Dauphine University to measure this impact. 
The study, entitled “Impact of remittances on poverty and inequality: Lessons from two new surveys conducted in Morocco and Algeria ”, provides a wealth of new information.

Housing, health and education - the largest items of expenditure

Since 1995, there has been a six-fold increase in remittances towards developing countries, reaching a total of 325 billion dollars in 2010. (Photo BL)
Since 1995, there has been a six-fold increase in remittances towards developing countries, reaching a total of 325 billion dollars in 2010. (Photo BL)
The empirical results from this study show that remittances sent by migrants considerably reduce the number of poor households in rural areas. They also prevent vulnerable households from falling into poverty. In reality, even though not all migrants are from poor families, the money they send back can have a positive knock-on impact on spending”, the report explains.

Generally, money is spent on goods and services: in particular housing, health and education, are the largest items of expenditure. 
 
“(…) Migrants' remittances positively influence parental decisions to allow their children to continue their studies, particularly if they are male and enrolled in a high school or a higher education institution”, points out report FEM33-22.

While some migrants choose to leave their country of origin in order to raise the living conditions of families remaining in the home country, some decide not to transfer any money. According to the study, the amounts vary according to migrants' income, country of origin, host country and duration of their stay abroad.
 
On the whole, remittances are sent towards countries with weak economic performance. They reduce the number of people living below the poverty line by 9%.

In Algeria, the study observes a significant difference between those populations that benefit from migrants' remittances and those that do not. Disparities can also be seen between regions. While Nedroma for instance, is characterised by high rates of emigration and low rates of remittances, Kabylie, with links to the French colonial past, sees many migrants return upon retirement. In the latter case, the study notes the importance of pensions paid to the former migrants.
 
In Morocco, remittances are the primary source of foreign currency, ahead of tourist receipts. In 2011, they accounted for 351 billion dollars. 
However, while remittances do improve living conditions, they cannot replace comprehensive and inclusive public policy. 

Nathalie Bureau du Colombier, MARSEILLE


Monday, February 16th 2015



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