Effect of remittances on exchange rate?4 answersRemittances have been found to have a significant impact on the exchange rate in several ways. Firstly, remittances contribute to the appreciation of the exchange rate in both the short and long-term perspectives. Secondly, remittances have a negative impact on trade balances, with the exchange rate being the driving force behind this effect. Thirdly, remittances can lead to an increase in exchange rate volatility, causing fluctuations in the real exchange rate. Additionally, remittances can influence the choice of exchange rate regimes, with autocracies that receive remittances being less reliant on fixed exchange rates. Finally, remittances can also lead to the phenomenon known as the Dutch disease, where a country's real exchange rate appreciates and hurts its competitiveness.
What are the effects of remittances on the education of migrant parents' children?5 answersRemittances have a positive impact on the school enrollment of children in migrant households. When remittances are directly invested in child education, the positive effects are further enhanced. However, the absence of remittances has more negative effects on child education, especially for girls. Parental migration during childhood is associated with increased years of schooling and higher probabilities of completing lower-secondary school, entering upper-secondary school, and completing upper-secondary school. These associations are strongest among children whose parents did not complete primary school and those living in rural areas. However, one study found that remittances have a negative and significant effect on the probability of children in migrant households having higher education.
How do remittances resolve financial constraint within families?5 answersRemittances resolve financial constraints within families by providing access to financial resources and promoting financial inclusion. Remittance recipient families exhibit a positive relationship between remittance reception and financial activities, such as investing in a home or a business. Remittances also act as insurance against income shocks, allowing households to bypass financial intermediaries and decrease liquidity constraints. Remittances have a positive impact on financial inclusion by promoting the use of deposit accounts, but do not significantly affect the demand for credit from formal institutions. Additionally, remittances can enable families to obtain their own property and gain independence, resolving financial constraints and improving their financial situation.
How do remittances affect household expenditure patterns?5 answersRemittances have a positive impact on household savings, increasing both the amount of saving and the saving rate. Receiving households tend to spend more on health, assets, and house repairs, and less on food. Remittances are positively associated with expenditures on food and education, while negatively associated with expenditures on alcohol and tobacco. Remittances also have a negative effect on food expenditures, suggesting increased economic inequalities resulting from increased remittances. Remittance-receiving households spend a smaller share of their budget on wedding ceremonies, indicating less engagement in conspicuous consumption. External remittance-receiving households have significantly higher expenditure per capita compared to internal migrant or non-migrant households, contributing to expenditure inequality. Overall, remittances can lead to increased savings, productive investments in human and physical capital, and changes in expenditure patterns, with implications for long-term economic development and inequality.
What is the value of remittances?4 answersRemittances to developing countries have been increasing over the years. In 2007, remittances were estimated to be $318 billion, and by 2011, they had reached $372 billion. It is projected that remittances will continue to grow, with estimates of $440 billion by 2015 and $467 billion by 2014. Remittances have become the second largest type of financial flow to developing countries, surpassing official development aid. They play a significant role in helping migrants and their families achieve upward mobility and can contribute to economic and job growth in migrant countries of origin. However, there are challenges in ensuring that remittances reduce poverty and spur development. While sound economic policies can maximize inward remittance flows, there is no formula to guarantee broader economic development.
What are the gendered effects of remittances on the human capital development of children?5 answersRemittances have gendered effects on the human capital development of children. Boys in remittance-receiving households are less likely to be enrolled in school compared to other children. On the other hand, girls in remittance-receiving households are more likely to have improved educational opportunities and are less likely to have no schooling. Additionally, remittances are associated with a decrease in children's participation in the labor market. These findings suggest that remittances can have a positive impact on the education of female children, potentially helping to increase their educational opportunities. However, the effects of remittances on boys' education are less positive, as they are less likely to be enrolled in school. Overall, remittances play a role in shaping the human capital development of children, with varying effects depending on gender.