Politics, Business & Culture in the Americas

The Remittance Hole

As migrant laborers worldwide suffer a cash crunch, trouble looms for the families left behind.

For most of the last three decades, developing countries around the world have reaped a huge indirect benefit from the expanding global economy simply by exporting labor. According to official figures, migrant workers poured an estimated $283 billion back into their homelands in the form of remittances to relatives in 2008 alone, though the unofficial number is probably closer to $350 billion. That’s more than three times the combined aid provided last year by industrial countries to the developing world.

But the global economic crisis may now seriously jeopardize those windfall earnings.

There is already evidence that undocumented labor flows across borders have begun to slow, particularly to the United States. The Pew Hispanic Center suggests that “inflows of unauthorized immigrants” have fallen from an average of 800,000 a year between 2000 and 2004 to 500,000 annually between 2005 to 2008. These flows continue to be on a downward trend.

Studies suggest that the slipping economy, rather than government attempts to control borders, is the main cause. There is a generally reliable correlation between recessions and a drop in the migration of undocumented labor. This is because such workers represent an agile labor market, responding directly to the availability of new jobs or a decline in employment opportunities. In contrast, the flow of legal permanent residents has been relatively steady this decade.Authorized or legal immigrants tend to be less affected by business cycles, since family reunification is their primary motivation for moving.

No one can estimate the precise fall-off in remittances. But any change is certain to have a major impact. In the last three decades, the number of transnational migrants has nearly doubled from an estimated 105 million to approximately 200 million today.In this decade, global remittances have become one of the world’s great poverty alleviation mechanisms…

 

Endnotes


Tags: Economic Crisis, Remittances from Latin America
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