Migrant remittances remain an important source of external financing for many developing economies. The estimated total amount of remittances flowing between countries in 2018 was US 694 billion, an increase from US 128 billion in 2000 (World Bank, 2021). Even though the World Bank estimated in April 2020 that remittances would fall by 20 per cent, they showed unexpected resilience, recording a drop of just 1.7 per cent compared to 2019 (World Bank, 2021). While the levels and direction of change of remittance flows during the pandemic varied, the total amount of migrant money transfers to low- and middle-income countries exceeded that of Foreign Direct Investments and Foreign Aid together, showcasing their importance as a social security factor (ibid).
The sheer size of remittance flows has always attracted increasing attention from academic analysts and policy-makers. Pre-Covid-19 studies had focused on the positive impact of remittances on financial and economic development (Olayungbo & Quadri, 2019), and the role of remittances in risk sharing (Bali and Rana, 2015) and business cycle synchronisation (Barajas et al., 2012). The current pandemic has laid bare the extraordinary interconnectedness of the 'global economy of work.' Negative health, economic, social or political changes for migrants in one setting have profound consequences across the world (Abel and Gietel-Basten, 2020).
The literature on the macroeconomic impact of remittances has been growing – albeit with mixed results, often contingent on country-specific circumstances and characteristics. However, there seem to be only limited studies examining the interactive effect of remittance flows on selected indicators of socio-economic development, such as growth and decent work, equality, and social mobility.
Furthermore, the study of these effects will exploit the variation of remittance levels caused by the many different labour market support policies that have been adopted by host countries (e.g. furlough schemes) during the Covid-19 pandemic. These policies, determined independently by each country, directly affected the labour market outcomes of migrants, and through these outcomes helped maintain to varying degrees the levels of migrant money transfers to the home countries. This has profound policy implications for migrants, families, and host and home countries alike.
This research will model the relationships between remittances and measures of socio-economic development in the home countries. It will adopt appropriate econometric methods such as the Pool Mean Group and Mean Group Autoregressive Distributed Lag (ARDL) approach or System Generalised Method of Moments (GMM). Two types of remittance-receiving countries will be examined: 1) EU-member states and 2) non-EU member states. The World Development Indicators database and other sources will be used for information on economic openness, financial development and corruption perception, as well as for data on socio-economic indicators.
Data on workers’ remittances will be obtained from the IMF Balance of Payments Yearbook whilst the World Migration report of the UN and the International Migration Outlook of the OECD will be the main sources of migration data. Research questions will include, what is the impact of migrant remittances on the socio-economic development (for example, on growth and decent work, equality, and social mobility) of home countries? How do host (western) countries' migration and labour market support policies affect the levels of remittances to home countries during the Covid-19 pandemic? What is the role of socio-economic development in remittance-receiving countries in generating new migration?
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