The Indicator from Planet Money - The Great Remittance Mystery

In 2019, migrants sent a record $500 billion back to their countries of origin. Then COVID hit, and the World Bank predicted a 20 percent drop in that flow of cash. But now the data is in, and it turns out remittances have held steady.

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NPR

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Is the indicator from Planet Money, I'm Stacey Vanek Smith remittances are the money that migrants people living and working abroad send to their countries of origin and there are as many as 217 million people around the world in that situation sending money back to their families because of that remittances have become a vital source of financing for many developing countries.

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How much money are huge affect the amount of money sent in remittances is greater than the sum of all Investments made by Foreign companies in developing countries combined and it is more than triple. The amount of Aid that governments provide those countries. So when the coronavirus pandemic took hold an economy's went into lockdown and no one was surprised when the World Bank predicted a 20% drop in remittances for this year A lot of times after Wilmette massive layoffs particular in the US which has the largest number of migrants in the World Bank Board of dire consequences for some developing economies that rely heavily on the cash, but those workers sent back but nearly eight months in that correction has not happened remittances this year have been steady and in some cases they have actually risen remittances to Mexico. For example jumped 9.4% in the first eight months of the year. It is a mystery.

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So after the break High it is that remittances are flying high, even though Global growth is circling the drain.

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Laura Curran is a specialist in development economics and a consultant at the World Bank is also reading for a job treating economics at Columbia University. Welcome. Thank you so much that I came across your research in Astoria. One of my favorite daily emails the conversation and you cited this staggering number in 2019 Migrant Center record, 554 billion dollars back to their countries of origin and that's up 20% in three years compared to 2016. So what's behind that jump there's a couple of factors that are behind that so one of them is that in the last few years. We've seen Healthy Growth in popular destination countries. So part of it can be attributed to growth in the United States and also increasing flows coming from the Gulf cooperation Council countries and from Russia as well. It means it was more money.

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I've been paid to these migrant worker was home or migrant workers earning money, which means they are able to send more money home exactly another big push. That's causing this increase in remittances, and I'm speculating a little bit here, but let me draw from some of my other research which is highlighted the Boom in the use of mobile money and online or digital Finance providers. So it's getting easier and easier to send money home digitally what one of the reasons for this is the penetration of smartphones. Am I right about that exactly right smartphones or even you know, feature phones are getting more and more common around the world and are unlocking these digital and online Finance Solutions, which are making it cheaper and easier than ever before to send money across countries and back home to migrant worker Families. How would families have done that I would migrant workers have got that money back in the past then before we had for digital technology traditional wire transfers, but as well.

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Informal channels. So for example a migrant worker might take cash home when they visit home for a holiday or to see their family and those are really hard to measure so it's not until recently that we've gotten a good idea of how big these clothes really are as some of these things are starting to come to light just screwed by the fact that there wasn't too much transparency in the past because of the informality of these transfers where is now there's much more times ferenczi because it's so digital and therefore easy to track something that is notoriously difficult to measure but it's getting easier and easier as things move into the Digital World Systems Inc. Layoffs plummeting growth numbers bankruptcies more layoffs in a massive declines and household income from many workers and yet remittances stay steady and in some cases

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Even rise. I mean that that's kind of a mystery. How is that? Right? So the first reason is that migrant workers are often essential workers and their destination countries. So they're not necessarily losing their jobs as much as we might expect and in some countries like in France and Spain and in Germany qualified migrants who are not allowed to work in certain sectors before especially essential sectors, like doctors or nurses are now being allowed to work in those sectors as part of the pandemic response. Can you talk about that? So a lot of migration research in the past has pointed out that one of the main reasons migrants move to another country to work is in search of better opportunities for themselves, but also for their families and to be able to provide for their families and it's been established in the kind of migration literature that

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Ira Menses tend to rise when things are bad at home. So you would expect remittances to fall when things go badly, but instead they rise and that really gets to the heart of what migration is about. It's about providing for their families as best as possible, even though they're struggling and their destination country's government stimulus right where people adults in some cases more money than they would have. Otherwise earn Drive, especially in the United States with the unemployment benefits supplements. I'm assuming that that stimulus would have had some effect on exactly it's so some migrants have been benefiting from these government stimulus is for one example in California, even undocumented migrants were allowed to receive stimulus checks and some researchers have links to an increase in remittances, especially to their families in Mexico. So this extra stimulus spending is also being trans

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Headed back home through higher remittances us upon zomig growing zone many migrants must be finding it harder to find work. Right even if they were in these insulated professions to some extent of the workers. I never living in the u.s. Is really expensive. So people here must be thinking about going back to their countries of origin right now and then you suggested that might actually boost remittances. Why would that be decided to move back home? They might send ahead all of the rest of their savings that they had saved up for their lives in the destination country. And that might be causing a really big boost in remittances as people are sending back the money before they leave for their return that people may be returning home. And therefore that would you just seem that that would drop the amount of remittances but I mean given the fact that it doesn't look as though this pandemic is ending anytime soon, right? So is his hold out at this level or do you think that we will

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Correction, it's really hard to say what's coming next. Although we see that there are remittances are rising and holding steady right? Now. This might not stay the same as you said you seen a lot of migrants returning home migrants losing jobs, and that could mean that the crash in remittances has been forecasted by International organizations. It may still be on the way and we might be only the Calm before the storm right now at the same time. We're seeing some countries are starting to tighten migration policies Titan visas and residency permits not certainly will have an impact to all right. Well, you'll be keeping an eye on it. So maybe we'll check back in with you and in six months or so just to get a sense of what the dater is. Sure. Thank you for joining us today and for helping us solve this indicator mystery. Thank you so much for having me.

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This episode of the indicator was produced by Darian woods and fact-checked by Chantal Danya. Our editor is Patty Hearst and the indicator is a production of NPR.
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