Several policies have been discussed and analysed to address this problem, such as increasing competition between MTOs or Money Transfer Operators, abolishing taxes on remittances, etc. One policy recommendation that is worth considering is to encourage MTOs to have a progressive system of transaction costs, something similar to direct taxes calculation.
In other words, charging a lesser percentage of remittance as transaction cost for small amounts and increasing the percentage for higher amounts. The current system is similar to heavily taxing even the meagre incomes that many overseas workers make. Making transaction costs progressive can increase the flow and frequency of remittance sent by migrants, who are otherwise forced to depend on unofficial sources to transfer money.
I am not saying that remittances are the panacea to poverty. But I do think that policies aimed at reducing transaction costs in the home and host countries could increase the flow of remittances through formal channels and increase the economic benefits for the migrant families. So far, the discourse on remittances has tended to focus on its economic implications. However, are the economic benefits of migration and remittances worth the social costs of living far away from your families and friends?
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We use MailChimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to MailChimp for processing. Learn more about MailChimp's privacy practices here. What is also important and often hidden from datasets I assume the data here drew on the traceable transfers through banks and agents , is the remittances that cannot easily be traced, particularly where there is a well-established migrant flow to neighbouring countries, often under favourable conditions no visa or work permit needed, healthy demand for labour, kinship support networks and accessible to travel etc.
Estimates are that there are million Nepalese migrants in India at any time, if not full time there then undertaking regular seasonal work and often only home for a few months per year. Average earnings are US per month so quite a bit below those that manage to get decent jobs and conditions further afield whether that happens of course is a whole other story.
However, with these kind of numbers something like half a billion US generated — probably that would be conservative — that as far as I am aware does not feature in official remittance figures, and in the vast majority of cases goes right back to the households.
This has been going on for generations as a normal livelihood activity, and is seen as less risky and more profitable than investing in farming at home.
In an average household in the poor Western districts nearest to India 1. Cash and assets are often hand carried by the returning migrant or a proxy…so no middle man fees. I am trying to find a way that this could be done even by non-migrants, and instead by citizens of a higher-income country—directly to people in lower-income countries that need the assistance.
Does anyone know if this has been tried before? I have not personally used cell phones to transfer money but the M-PESA technology in Kenya has made it easier to transfer money using mobile phones. A similar model could be replicated in your area.
In many cases, it has also helped to reduce poverty in Kenyan migrant households. If anyone is interested can kindly check in the web. Peer-to-peer transaction and all you need is a cellphone with internet access.
This has taken off like wild fire in Africa and Europe. Welcome to the 21 century. I adore you many are already using it on Mexico. That is where Ripple technology and the cryptocurrency XRP comes in. Lower rates, fast transfer. So thank you. However, one thing I still wonder about — what are the effects on inequality within countries? It might depend on the country, of course — or the region. Do the smaller remittances that the laboring poor send to their families keep them just above the poverty line, while the perhaps larger?
Since inequality has effects on violence, which in turn has effects on overall development, it would be interesting to tease out the implications. Remittances can increase inequality in the home countries. In India, the state of Kerala, which is the highest remittance earning state, is also the state with the highest economic inequality in the country.
However, the effect of remittances on inequality is not as straight forward as its relation to poverty. Barnow, B. Journal of Human Resources, 22 2 Bassi, L. Review of Economics and Statistics, 66 1 Cave, G. Chami, R. Cochran, W. Sankhya, ser. A, 35 4 Cox-Edwards, A. Czajka, J. Hirabayashi, R. Little, and D. Journal of Business and Economic Statistics, 10 2 De Haas, H. International Migration Institute Paper 3. Ebeke, C. Ekanayake, M. Journal of International Business and Economics. Funkhouser, E.
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