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Wednesday, January 30, 2008

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notsneaky

Thanks for the great pointer! I've got a student who'll be writing his senior thesis on a related topic next term - the impact of remittances on incidence of child labor. So far he's only gathered the data but one of his hypothesis is that in some instances remittances can actually increase the incidence of child labor. If households use the remittance money to finance start up of family businesses then they might pull kids out of school and have them be employed in the family business - if true, this would fit the finding with respect to education above.

But I'm not sure these are really "negative" consequences of remittances. The fact that people work less when receiving remittances seems like a straight forward income effect, and as long as leisure is a "good", there's nothing wrong with that. Likewise, the decision to lower investment in education in favor of investment in job-specific skills through employment in family business might, from the point of view of the household, be an improvement.

François Godard

Another negative aspect of remittances that has not been studied thoroughly as far as I know is social status real estate investment. I think of immigrants in France from northern Portugal and Kabylia (in Algeria) who invest considerable amounts in building villas and mansions back home publicising their economic success. These are usually not used more than a few weeks per year, built without proper building permit and, by any account, very destructive of the local landscape and undermining these poor areas future tourism potential. Moreover we are talking about poor rural areas where population is stagnating or declining (migrating to cities)and housing demand is weak and should remain so. Therefore the value of the houses is unlikely to rise, and the children of the immigrants, who will attain higher social status and will not put too much value on the image they project on their village of origin, are unlikely to want to use them for their holiday in the future.

Remitter

Having peopke working abroad is both a class statement as well as a sense of relief for many families in the third world countries. In countries like India and Philippines, the families of the overseas workers enjoy a far better lifestyle than those who don't have any relative living in the US or the UAE. But the socio economic effects of such a trend has been both negative as well as positive. On the positive side, the economies of these countries (India, Philippines, etc) have received a lot of money that has helped them to nmake their economies stronger, while on the flip side most overseas workers have been overburdened by the fact that they have to support their families back home while managing a difficult life in a foreign land. Also reports of harassment, torture and assaults have been rampant. With the US recession looming large, the going has certainly got difficult.

Araba Yarışları

But I'm not sure these are really "negative" consequences of remittances. The fact that people work less when receiving remittances seems like a straight forward income effect, and as long as leisure is a "good", there's nothing wrong with that. Likewise, the decision to lower investment in education in favor of investment in job-specific skills through employment in family business might, from the point of view of the household, be an improvement..

remittance philippines

Remittance can also refer to the accounting concept of a monetary payment transferred by a customer to a business. Remittances also foster, in the receiving countries, a further economic dependence on the global economy instead of building sustainable, local economies.

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