Migration, Remittances, Poverty and Inequality

AbstractMigration, Remittances, Poverty and InequalityThe Philippines
ByErnesto M. Pernia
The paper looks into the effects of international migration and remittances on household incomes and well-being, poverty reduction, human capital investment, saving, and regional development in the home country. Remittances appear to raise average incomes for all income groups but more so for the richer households than for the poorer ones, a finding that is consistent with that in several Latin American countries. Such eyeballing of the data is supported by econometric analysis which further reveals that remittances enhance household savings, spending on education and health care, and help the poor move out of poverty. Analysis at theshow more contentBecause international migrants typically are among the better educated and experienced workers in the home country, their departure often results in a disruption of economic activity before the vacancies are filled. And even when these are filled, the situation may not be the same as before. Labor market responses would depend on the composition of emigration and the nature of labor markets in terms of flexibility, segmentation, and rates of un- and under-employment. Lucas (2005) reports two general types of outcomes: (i) where emigrant workers are easily replaced with no discernible loss in output or rise in wages (e.g., India, Indonesia, and Sri Lanka); and (ii) where upward pressure on wages is palpable (e.g., Pakistan, Philippines, Mexico, Malawi, and Mozambique).1 In both cases, the labor market outcome appears to be beneficial to those left behind.1 Tan (2007), however, finds no significant upward pressure on real wages in the Philippines and opines that, perhaps, employers decide to hire less qualified replacement workers at prevailing wages instead of raising them to attract or retain highly skilled personnel. 2 For example, while infant mortality rate had dropped to 29 per thousand in 2001, it is higher than in Malaysia and Thailand; moreover, as much as 40% of women deliver babies without an attending physician, nurse orGet Access
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