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Connecting the Dots: Demographic and Labor Trends’ Impact on Remittances Manuel Orozco May 16th, Demographic Trends, Immigration Policy and Remittances


Demographic and Labor Trends’ Impact on Remittances  There is a consistent relationship between the demand

for foreign labor and remittance transfers;  This relationship is associated to a non-negligible mass of migrants sending to their relatives, ranging from 60 to 70% even in times of economic downturn (as the 2001 recession and 2006 real state decline suggest);  Demographic characteristics such as citizenship, gender, and length of time in the country have a positive impact on the amount of remittance transferred;  The continuity of flows is informed by demographic, labor and economic conditions in the home countries and by expectations of recipients to migrate, particularly among those in the younger generations. 2


Remittances quarterly growth by transactions and Latino unemployment 7000 6000

Avg. trans. Unemployment Constr. Hisp. Unemp.

14 12 10

4000

8

3000

6

2000

4

1000

2

0

0

Q

1

20 Q 0 3 0 2 Q 00 1 0 20 Q 0 3 1 2 Q 00 1 1 2 Q 00 3 2 20 Q 0 1 2 2 Q 00 3 3 20 Q 0 1 3 2 Q 00 3 4 2 Q 00 1 4 20 Q 0 3 5 2 Q 00 1 5 2 Q 00 3 6 20 Q 0 1 6 20 07

5000

3


The ratio of migrants sending money has increased over the past five years: percent who says that have sent remittances

80% 70% 60%

73% 59%

61%

2001

2004

50% 40% 30% 20% 10% 0% 4

2006


Migrant Demographic Determinants of Remittance Sending

Age Male Education Length of time in US U.S. Citizen Engagement Constant 5

B .001 .279 .012 .205

Sig. --** --***

.509 .572 -4.946

*** *** ***


Length of time in the US and average remitted 450 400 350 300 250 200 150 100 50 0 <1 year

1 to 3 years

4 to 6 years

South America Central America 6

7 to 9 years

Mexico Caribbean

10 to 12 years

13 to 15 years

Africa Migrants

15+ years


Gender and average remitted 450

400

350

300

Female Male

250

200

150

100

50

0 Jamaica

7

Guyana

Bolivia

Guatemala

Mexico

Ghana

El Salvador

Nigeria

Colombia

Ecuador

Dom. Rep. Nicaragua

Cuba

Honduras


US citizen and average remittance sent 600

500

400

Citizen No US Citz.

300

200

100

0 Jam aica

8

Guyana

Ghana

Guatemala Colombia

Mexico

El Nicaragua Salvador

Nigeria

Ecuador

Bolivia

Dom . Rep. Honduras

Cuba


Latin American and Caribbean cities studied

-Semi-urban cities where typically one third of money goes; -Where migration has occurred; -With different population demographics; Jerez, Zacatecas Mexico

Salcaja, Quetzalte nango, Guatemala

May Pen, Jamaica

Suchitoto Catamayo, , Loja, El Ecuador Salva dor

Population

37,558

14,829

57,332

17,869

27,000

Labor force (%)

41%

37%

35%

34%

31%

Population ages 5-19 34.7% 36.81% (ages 0-14) (5,459)

32.3% (18,520)

34% (7 to 18)

30%

Migration

Prior to 1970s

1980s

1980s

1980s

1990s

Proximity to major urban center

45kms to Zacatecas

9 kms to Quetzalte nango

58 kms 45 kms to to capit capital al

9

36 kms to Loja


Local economies in LAC

1. The local economies are weak or barely coping: subsistence agriculture prevails even in cities with some manufacturing activity, manufacturing is still artisan, and commerce is unevenly modern. The financial sector is often if not always inaccessible or unavailable. 2. About 15% of families receive remittances, with at least one child and/or elderly person living in each recipient household. 3. The cost of living is expensive (between $200 and $400 a month), comparable to the amounts received in remittances and equal to at least three minimum wages. As a result, little money is left for savings. 4. Remittance recipients make good use of their money: in addition to spending money on food, education and health, some do manage to save; 5. The local entrepreneurial class is unable to adapt or restructure itself to become more competitive in the global context, even when they have comparative advantages. They offer poor goods and services, whether in education, health, finances, insurance, or locally produced goods; 6. Local and central governments are uncertain as to what they can do and have few options to act upon; 7. Between 10 and 30% of remittance recipient households say that one person in the family is likely to migrate in the future; 8. The average educational attainment in these cities (semi-urban, semi-rural communities) is lower than 6th grade, that is, eight years less than levels of educational attainment in the U.S.; 9. Government, private sector, and civil society actors have not in any way considered an approach to leveraging remittances to expand growth. Whatâ&#x20AC;&#x2122;s more, no support networks exist to address the needs of the families of migrants. At the same time there exist widespread stereotypes about youth and women not working and complaints about the high numbers of youth emigrating. 10


Recipients and Productive base of local economy

Jerez, Zacatecas Mexico

Salcaja, Quetzaltenan go, Guatemala

Suchitoto, Catamayo, El Salvador Loja, Ecuador

Percent of remittance recipient households

18.20%

15%

23%

15%

Estimated number of remittance recipients

6,836

2,224

2,073

4,050

Number of people in household

4 4

5

5

Number of children in household 1

2

Main economic activities (%) --Commerce and Services --Agriculture --Manufacturing --Construction

42%; 15.5%; 4% (excl. subs.); 52.2%; 6%; 7.6%;

11

May Pen, Jamaica

35%; 19%; 13%; 11%;

6 2

3

2

39%; 20%; est. 8%


Cost of living and remittancesâ&#x20AC;Ś. Jerez

Catamayo

Suchitoto

Salcaja

May Pen

Cost of living . . . Food

219

228

209

201

245

Services (utilities)

60

44

40

43

99

Education

13

32

29

56

98

Health

40

41

34

68

22

Entertainment

27

3

40

35

14

Wages

323

303

125

162

295

Total earnings, remittances included

930

501

622

353

320

Monthly remittances amount received

637

331

515

181

247

Income . . .

12


An urgency to act: accelerating initiatives to leverage financial flows

70 Percent considering emigrating Average age

60 50 40 30 20 10 0 13

Jerez

Catamayo Suchitoto

Salcaja

May Pen


Demographic determinants of amount received among remittance recipients Step 1 Female

B

Sig. 0.29617

**

Occupation

0.418612

***

Number of beneficiaries

0.005102

---

Education

-0.07471

---

Length of time receiving

0.025818

---

-0.0163

***

0.621252

***

Age Constant 14


Mexican (native and foreign born) labor force in the U.S., and remitters

16000

Mexican american labor force (US Bureau of Labor)

14000

Mexican immigrants (US Census) 12000

Mexican remiters (US census est.) Transactions reported by BoMx

10000

Est. migrant remit using BoMex. Data

8000 6000 4000 2000

20 06

Q 4-

20 06

Q 1-

20 05

Q 2-

20 04

20 03

Q 3-

20 03

Q 4-

Q 1-

20 02

20 01

Q 2-

Q 3-

20 00

Q 4-

20 00

19 99

Q 1-

Q 2-

19 98

Q 3-

19 97

19 97

Q 4-

Q 1-

19 96

Q 2-

19 95

19 94

Q 3-

Q 4-

19 94

Q 1-

19 93

19 92

Q 2-

Q 3-

19 91

19 91

Q 4-

19 90

Q 1-

Q 2-

19 89

Q 3-

19 88

Q 4-

Q 1-

19 88

0

U.S. Census data shows that since 2000, 50% of Mexicans in the U.S. are foreign born (immigrants), and survey data (2001, 2004 and 2006) on migrants shows that approximately 75% of adult migrants send remittances to Mexico. As the Bank of Mexico improves its measures, the number of transactions (90% of which are personal transfers) approaches the estimated number of Mexican immigrants remitting [green line]. 15


connecting the dots: demographic and labor trends' impact on remittances