Migration, remittances, and development
indicators: The economic pillar
Ben Slay
Team leader, regional poverty reduction practice
UNDP—Europe and Central Asia
Almaty, 1 November 2013
Three inter-woven themes
• Economics of migration and remittances
• Policy areas or particular relevance:
– Labour markets
– Macroeconomics
– External sector (balance of payments)
– Development
• Measurement/indicator issues
– Suggested indicator framework
The labour market
and (external) migration
• Pluses:
– Employment
– Human capital acquisition
• Minuses:
– Brain drain
– Informality:
• Host countries—many migrants work in informal sector
• Countries of origin—migrants don’t contribute to state
pension funds
– Social impacts:
• Host countries—risk of exploitation, social tensions
• Countries of origin—split-up families, hardships for children
Macroeconomic, balance-of-payments
dimensions—Pluses
• Global economy: Migration from lower to higher
productivity countries increases global GDP
• Host countries—migration reduces:
– Wage-push inflationary pressures
– Sectoral, regional labour market shortages
• Countries of origin—remittances support:
– Domestic financial systems:
• Foreign exchange inflows (stable exchange rates)
• Working capital for small businesses
– Domestic demand:
• Consumption
• Investment (housing construction)
Macroeconomic, balance-of-payments
dimensions—Minuses
• Countries of origin:
– Dutch disease?
• Remittance inflows may boost real exchange rate and
reduce the competitiveness of labour-intensive exports
• Value added captured by host country instead
– Excessive consumption?
– Sustainability?
• External shocks (2008-2009)
• Migration cycle
• Host countries:
– Lower wages?
Development—Poverty reduction
(Example: Kyrgyz Republic)
Remittances/GDP
31%
4 of the world’s 8 largest
recipient countries are in
the post-Soviet region
W/ remittances
Income poverty rates
29%
W/out remittances
45%
43%
40%
38%
37%
27%
34%
2010
2011
2012
IMF, World Bank data; UNDP calculations.
2010
2011
2012
Source: National Statistical Committee, Kyrgyz Republic.
Development finance—Do
remittances matter more than ODA?
8.4
Ratio of remittance inflows
to ODA receipts (2011)
3.8
3.0
2.2
Tajikistan
Armenia
Kyrgyzstan
World Bank, IMF, OECD data; UNDP calculations.
Georgia
1.8
Kosovo*
* As per UNSC resolution 1244 (1999).
• Are
remittances
self-targeting
anti-poverty
transfers?
• Should
Russia get
credit for
supplying
such large
remittance
outflows?
Measurement issues: Labour markets
• Key institutions:
– Statistical offices
– Ministries of labour/social protection
– Migration/border services
• Survey data:
– Labour force surveys
– Household budget surveys
– Company data (on recruitments, redundancies)
• Registration data (from migration/border services)
• Migration data can be “backed out” from data on:
– Remittance inflows
– Average wages in key sectors
Possible migration indicators
• Possible indicators:
–
–
–
–
Migrants/population
Migrants/labour force
Migrants/employed
Migrants/unemployed
• These can be applied to both countries of origin
and destination
• Is further disaggregation possible, by:
– Sector of employment?
– Region?
– Other vulnerability criteria (e.g., gender)?
Possible remittance indicators
• Mentioned above:
– Remittance inflows (outflows)/GDP
– Remittance inflows (outflows)/ODA
– Remittance inflows/household incomes (HBS data)
• Other possible indicators:
– Remittance inflows/exports of goods and services
– Remittance inflows/trade balance
– Remittance inflows/current account balance
– Remittance inflows/domestic consumption
Adjusting the trade balance for
remittances: The case of Tajikistan
Merchandise trade balance*
Merchandise exports*
$3.7
Remittance inflows
With remittance inflows
$3.1
$3.2
$2.8
$2.0
$2.3
$1.7
$1.0
$1.2
$1.2
$1.3
$0.2
2009
2010
-$0.3
2011
-$0.3
-$1.6
2009
2010
2011
2012
In billions. Sources: National Bank of Tajikistan, IMF; UNDP calculations. * Customs data.
2012
-$0.6
Suggested indicator framework—
Remittances
Suggested indicator
Feasibility
This indicator could be specified as an
elasticity, or as a % (or percentage point)
differential. The underlying data are
available in most countries in the region.
1
Pre-, post-remittance poverty rates
2
Remittance inflows (outflows)/ODA
These data are available now.
3
Remittance inflows (outflows)/GDP
These data are available now.
4
Remittance inflows (outflows)/trade balance
These data are available now.
5
Remittance inflows/household incomes
These data are publicly available now,
for most countries in the region.
6
Remittance inflows/household spending (or
retail sales)
These data are publicly available now,
for most countries in the region.
7
Remittance inflows/construction spending
These data are publicly available now,
for most countries in the region.
8
Remittance inflows/company working capital This would require specialized surveys.
Suggested indicator framework—
Migration
Suggested indicator
9
Feasibility
Migrants/population
10 Migrants/labour force
11 Migrants/employment
12 Migrants/unemployed
13 Sectoral, regional characteristics of migrants
Although registration data
can provide some useful
information, specialized
surveys of migrants would
be required.
14 Socio-economic vulnerability characteristics of migrants
Note: “migrants” can be measured either as stocks or flows (i.e., changes in stock levels).
Thank you very much!
Ben.slay@undp.org