Factors Of Migration, Remittances, And Poverty

From the evidence espoused in the theoretical and empirical review on migration, remittances, and poverty, it is an undeniable fact that remittances contribute immensely to the livelihood of developing economies. Migrants living in their respective host countries send money to their families back in their origin countries for various uses. The questions then remains, what factors determine what migrants would send home? What is the propensity to remit based on?
Literature on remittances draws our attention to two theories regarding remittances, the theory of altruism and the portfolio or investment theory. The altruistic reason for sending money to the family back home is based on the principle that the utility of the migrant depends on the …show more content…
If economic activity in the host country is booming with a lot of opportunities, higher income and output levels, stable real exchange rate then migrants will be rewarded in such terms and could remit high volumes back home to their families. Thus, better economic conditions in the host country will improve the employment and earning prospects of migrants who would then be able to remit home regularly (IMF, 2005). This, however, will be determined by the economic situation in the country of origin. Where origin countries enjoy stable and high return on financial assets, low inflation level, efficient financial system and intermediation, stable exchange rate then migrants will not hesitate to send their hard earned incomes to the home countries for investment. Again, political stability and the general risk level could affect the volume of remittances. When home countries are politically stable laced with investment protection laws, policies and working institutions, migrants will find their origin countries attractive for investment and they will eventually remit huge volumes of funds for investment. It is, however, argued that poor economic conditions, high inflation, depreciation of the local currency, higher unemployment, and political instability in the home country will spark migration and compel migrants to send a lot more remittances to …show more content…
When origin countries gladly welcome migrants with policies that will help them to quickly integrate and settle as well as include them in the political administration, then migrants will see themselves as important part and owners of the society. Migrants will then be encouraged to invest in a society where they will be part of the political administration and be helped to integrate and settle when they return