HOW DO REMITTANCES CHANGE LIVES?

















Remittances and Northern-Triangle Migration

According to survey data from the World Food Programme, the desire for economic security is one of the primary motivations driving migration from the Northern Triangle. For many of these migrants, the primary reason to migrate to another country is to be able to send money home in the form of remittances. In fact, 71% of families in the Northern Triangle that have had a family member migrate abroad receive remittances. Taken together, these remittances become an enormous part of the Northern Triangle economy that isn't measured in traditional metrics like GDP. For our research, we focused on how remittances impact individual families. We wanted to see what specific goods and services families were purchasing with remittance money. Using the 2020 survey dataset from the World Food Programme, we looked at families that had had at least one member migrate, categorized by whether or not they received remittances. By comparing the spending habits of similar families that did or didn't receive remittances, we hoped to see what families were purchasing with remittance money. Our hope is that governments and NGOs can use this data to reduce the need for migration by making it easier for families to get access to the specific goods and services that would otherwise require remittance money to purchase.

Remittances and GDP

The map on the right shows the proportional sizes of the Northern Triangle economies as measured by GDP. Remittances aren't counted in GDP, but are equivalent to expanding each economy by 14-24 percentage points.

Data from the World Bank

Monthly Expenditures

When we look at the families from these three countries that have had a member migrate, it becomes clear that families receiving remittances spend significantly more money each month than those that don't receive remittances. Due to limitations on data in the Northern Triangle, monthly expenditures are also a good proxy for total income.

Data from the World Food Programme

Spending on Food

Breaking this spending down by category, we start to see what type of impact this increased purchasing power has on individuals. Based on the increase we observed in food expenditures, families getting remittances could buy 2.5 - 3.3 more pounds of chicken per family member each month than those without remittances.

Data from the World Food Programme & numbeo

Chicken Price Comparison

Spending on Healthcare

Using the generic medication esomeprazole (also sold as Nexium) as a benchmark for prescription drug prices, we see that families receiving remittances can also buy more medication than those without.

Data from the World Food Programme

Medicine Comparison

Added Savings

Our data also shows that remittances allow more families to save money for the first time, or to add to their existing monthly savings. In some countries, remittances allow families to considerably increase the amount they save each month.

Data from the World Food Programme

savings Comparison

All Spending Differences

In sum, remittances increase spending in almost every category. The chart on the right looks at the difference in proportional spending by category. We see that each country has one unique category where proportional spending was dramatically higher for families receiving remittances.

Hover the cursor over the spending categories in each country for more information.

Data from the World Food Programme

Key Findings

In general, we found that households that received remittances are spending significantly more in long-term expenses such as housing improvements, savings, and paying off debt However, each country has one unique spending category with a dramatically higher proportional increase in spending for families receiving remittances. These categories may provide a good starting point for future research about what services governments and NGOs could provide to reduce migration demand With this data, governments and NGOs can see what types of goods and services are most needed by the populations most likely to migrate Through targeted investments that provide these goods and services at lower costs, governments and NGOs can reduce the need for remittances and by extension, migration

























Recommendations

OIn order to reduce the demand for migration, we propose researching ways to invest in the following categories of goods and services in each country:

  • Housing in Guatemala

  • Health in El Salvador

  • Transportation in Honduras



Daniel Pratama, McKenzie Humann, John Devine