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Migration and Remittances in Emerging Market Economies of Southeast Asia: Do they Offer Paths for Structural Poverty Transitions?. Arnoldshain Seminar XI “Migration, Development, & Demographic Change – Problems, Consequences, Solutions”. Mulubrhan Amare (with Herman Waibel & Lena Hohfeld )

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slide1

Migration and Remittances in Emerging Market Economies of Southeast Asia: Do they Offer Paths for Structural Poverty Transitions?

Arnoldshain Seminar XI

“Migration, Development, & Demographic Change –

Problems, Consequences, Solutions”

Mulubrhan Amare

(with Herman Waibel & Lena Hohfeld )

Institute of Development and Agricultural Economics, School of Economics & Management, Leibniz Universität Hannover, Germany

outline
Outline
  • Background
  • Objectives
  • Conceptual framework
  • Data description
  • Econometric approach
  • Results
  • Summary & conclusions
slide3

Background

  • Motivation (I)
  • The share of remittances to total income growing in many developing countries.
  • More than 30-40% rural income from remittances (Nguyen et al., 2007)
  • Evidences on poverty reduction and inequality impact is mixed
    • Migrant in low quality employment
    • Remittances may spend for consumption
  • Increase inequality in the community of origin

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

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Background

  • Motivation (II)
  • Limitations on the impact of migration and remittances
    • Do not distinguish whether remittances lead to structural transition due to asset growth or
    • Stochastic transition due to apparent higher income
    • Overestimation of poverty transition impact of migration & remittances
  • To learn the impact of migration on structural transitions, asset based approach is used
    • Suitable for identifying structural impacts of migration and forward-looking policy

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

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Objectives

  • To investigate to what extent migration & remittances improve asset accumulation in the source communities
  • To examine whether migration & remittances has impact on structural poverty transitions of rural households
  • To identify channels though which migration & remittances can potentially influence welfare dynamics of rural households

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

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Conceptual framework

  • Income is the product of households’ asset endowments & the returns to capital (Barrett,2005)

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

slide7

Conceptual framework

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

slide8

Conceptual framework

  • Hypotheses

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

slide9

Data description

  • Panel survey to assess vulnerability to poverty in Asia
  • 3 provinces in Vietnam (220 villages & 2200 households )
  • 3 provinces in Thailand (220 villages & 2200 households )
  • 2007, 2008 & 2010 of household & village level surveys.
  • Across all three rounds, 2108 & 2095 households appear in all rounds in Vietnam & Thailand,

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide10

The Econometric approach

1. Constructing asset index

2. Asset growth equation

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

slide11

The Econometric approach

2. Asset growth equation

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

slide12

The Econometric approach

Background Objectives Conceptual framework Data Econometric approach Results Conclusions

slide13

Results & discussions

Migrant households, income from remittance & number of migrants

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide14

Results & discussions

Descriptive statistics of households by migration status in Vietnam &Thailand

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide15

Results & discussions

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide16

Results & discussions

The Impact of Remittances on Asset Growth by Welfare Status in Vietnam

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide17

Results & discussions

The Impact of Remittances on Asset Growth by Welfare Status in Thailand

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide18

Results & discussions

Blinder–Oaxaca decomposition of growth difference by remittance status (%)

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

slide19

Results & discussions

    • For Vietnam
  • Remittances (not migration) has significant impact in explaining asset accumulation overtime
  • Structural poor migrant households with remittances experience higher growth in asset
  • Remittances increase rural wellbeing by increasing productivity and endowment effect to some extent
  • Shocks, limited accessibility of infrastructure facilities & ethnicity hinder asset accumulation overtime

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions

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Results & discussions

    • For Thailand
  • Migration & remittances hinder rural households to accumulate assets & escape from poverty
  • Migration & remittances decrease asset accumulation for structural poor households,
    • It offsets the tendency of poor households to climb out of poverty & catch-up to their better-off neighbors.
  • Shocks, limited accessibility of infrastructure facilities & gender offset the tendency toward convergence

Background Objectives Conceptual framework Data Econometric Approach Conclusions

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Conclusions

  • Poor households are more likely to migrate & receive remittances, but tend to have low quality and return employment
  • Rapid & continuing out-migration of younger household members increase labor constraints
  • Households receiving remittances tend to be structurally poor households because they spend remittances for consumption purpose

Background Objectives Conceptual framework Data Econometric Approach Conclusions

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Conclusions

  • Policy recommendations
  • Migration & remittances increase productivity.
  • However, not all migration decisions lead to the expected success
  • High rates out-migration of young households members can result in
    • a decline in production & productivity in rural areas,
    • bad employment in urban areas
  • Inequality in rural areas may continue growing

Background Objectives Conceptual framework Data Econometric Approach Conclusions

slide29

Results & discussions

Structural income & poverty by migration status

Background Objectives Conceptual framework Data Econometric Approach Results Conclusions