Migration and the associated remittances make a difference to poverty because the number of people who migrate from a country and go to work in other countries send money to their respective countries. Such remittances reduce the poverty levels of the senders’ relatives and contacts back home (Oishi, 2005, pp. 10). Remittances also increase the average household income in a nation, thus making the citizens to live above the poverty. The poverty rates of a nation are thus minimized (Khawaja, 2003, pp. 33).
When used in the nation, the remittances can alleviate poverty levels since the money is used to purchase products made in the nation. Such funds can thus benefit the local producers who may lack a ready market for their goods (Rodrik, D 2002). The major stumbling blocks of remittances are that it can lead to inflation within the respective country, thus negatively impacting on the exchange and interest rates. This is because the rates depend on the amount of remittance coming into a country (Taylor, 1992 pp. 200).
Remittances also affect the economic growth rate of a country since it provides money for the basic requirements of the citizens. The citizens’ working capacity is thus reduced for they can access their basic requirements without working. In turn, the country’s Gross Domestic Product is minimized, a situation that reduces the nation’ income (Jones, 1998). Remittances can affect the household migration, thus affecting the country’s production. This is because the educated elite shift to other countries in search of better jobs. The working capacity of a nation is reduced since the country loses its workforce but alleviates poverty.
Further, the emigres remit funds to their nation (Granovettor 1995). Remittances can make a nation to lose its income tax when the money finds a way into the nation without following the right channel, thus evading requisite taxes (Skeldon, 2002, pp. 6). When the young leave the nation, the relative productivity of the nation is reduced since the nation loses new technology and other productive methods. References Granovettor, M S 1995, Getting a job: A study of contacts and careers, second edition, University of Chicago Press, Chicago.
Jones, R C 1998, ‘Remittances and inequality: A question of migration stage and geographic scale’, Economic Geography, Vol. 74, no. 1, pp. 8-25. Khawaja, M 2003, ‘Migration and the Reproduction of Poverty: The Refugee Camps in Jordan’, International Migration, Vol. 41 no. 2, pp. 30-5. Martin P. 2004. Challenge paper on population and migration, Copenhagen Consensus, Denmark.
Oishi, N 2005, Chapter 5 – the road from home: Women’s autonomy, migration, and the trapping mechanism’, in Women in Motion: Globalization, state policies, and labor migration, Stanford University Press, Stanford, pp. 105-144. Rodrik, D 2002, Feasible globalizations – NBER working paper, no. 9129, August, National Bureau of Economic Research, Washington, DC. Skeldon, R 2002, ‘Migration and poverty’, Asia-Pacific Population Journal, Vol. 67, no. 82, pp. 4-8. Taylor, J E 1992, ‘Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects,’ Journal of Policy Modelling, Vol. 14, no. 2, pp. 187–208. Yang, D I & Martinez, C A ‘Remittances and poverty in migrants’ home areas: Evidence from the Philippines’