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Money makes the world go round…and goes round the world The impact of migration and remittances


According to the World Bank, 3.4% of the world’s population lives outside their nation of birth. For many, migration serves as a means of improving economic well-being, escaping violence and persecution, or finding education and employment. Although immigrants frequently separate from friends and family who remain in their place of origin, they often stay connected. In fact, those living abroad sent over $570 billion to their home countries in 2016, which is more than triple the amount of official worldwide development aid, according to the Pew Research Center.

The map above shows the proportion of remittance inflows to GDP for nations around the world in 2015. Several factors affect the data, which are based on two variables: the size of the economy and the magnitude of remittance inflows. Thus, smaller, poorer nations with large populations living abroad are likely to have larger remittance inflows-to-GDP ratios.

The size of a nation’s migrant population depends in part on the policies of other nations. Given that the U.S. is the largest destination for immigrants worldwide, U.S. policies, such as offering temporary protected status (TPS) to migrants from certain nations, can substantially affect the magnitude of remittance inflows. TPS is given to migrants from nations experiencing natural disaster or violent conflict and grants the right to work and remain in the U.S. until the status expires.

Ten countries currently have TPS, and FRED data are available for 7 of them. For Nepal, Haiti, Honduras, and El Salvador, remittances amount to more than 16% of GDP. Of the 40 nations with the highest remittance inflow-to-GDP ratios, 12 are, have been, or are requesting to be covered by TPS. Of the 40 nations with the lowest remittance inflow-to-GDP ratios, only 2 are or were covered by TPS.

The impact of migration policy and remittance inflows may seem small, but a study found that a 10% increase in per capita remittance inflows leads to an average decrease of 3.5% in the number of people living in poverty in the home country. The same study found that “a 10% increase in the share of international [e]migrants in a country’s population will lead to a 2.1% decline in the share of people living on less than $1.00 per person per day.” Through entrepreneurship, cultural exchange, and employment, emigrants can prove beneficial to the economies of their home countries. Look for future posts that examine the effects on the host country.

How this map was created: From GeoFRED, select “Nation” as the region type, then look for data on “Remittances.”

Suggested by Maria Hyrc and Christian Zimmermann.

View on FRED, series used in this post: DDOI11ALA156NWDB, DDOI11USA156NWDB, DDOI11ZWA156NWDB


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