Migration and Remittances Eastern Europe and the Former Soviet Union Bryce Quillin World Bank Europe...
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Transcript of Migration and Remittances Eastern Europe and the Former Soviet Union Bryce Quillin World Bank Europe...
Migration and RemittancesEastern Europe and the Former Soviet Union
Bryce QuillinWorld Bank
Europe and Central Asia Region
2
The Presentation
Overview of Migration/Demographics Trends in Europe & Central AsiaCost-Benefit Analysis of MigrationInternational Regulatory FrameworkPolicies to enhance the returns to migration and remittances
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Key Messages
Migration in ECA is unique, significant, and likely to growRemittances are the second most important source of financing for many and the first for poorestGood economic policies and institutions maximize gains for sending and receiving countries and migrants (“Triple Win”)Current immigration policies, largely bilateral, may not stem large undocumented migrationFurther study and policy experimentation may help overcome the limitations of the existing framework
4
The Presentation
Overview of Migration/Demographics Trends in ECACost-Benefit Analysis of MigrationInternational Regulatory FrameworkPolicies to enhance the returns to migration
5
Migration has followed a biaxial pattern: Eastern to Western Europe and Low Income
CIS to Russia, Kazakhstan, and Ukraine
6
A lot of early migration was driven by civil conflict and war
7
Net migration rates were volatile in Central Asia during the early years of transition
Net Migration Rates 1989-2003 (Per 1000 Population)
-35
-30
-25
-20
-15
-10
-5
0
5
10
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Kyrgyz Rep. Tajikistan Kazakhstan
Note: Calculated from residual method.Source: National Statistical Offices. World Bank Staff Estimates.
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This volatility is consistent with patterns found in other parts of the
CIS...Net Migration Rates 1989-2003
(Per 1000 Population)
-10
-8
-6
-4
-2
0
2
4
6
8
10
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Moldova Armenia Russia Ukraine Belarus Azerbaijan
Note: Calculated from residual method.Source: National Statistical Offices. World Bank Staff Estimates.
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…and Central and Eastern Europe during the early 1990s
Net Migration Rates 1989-2003 (Per 1000 Population)
-30
-25
-20
-15
-10
-5
0
5
10
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Latvia Lithuania Estonia Poland Czech Republic Hungary Bulgaria Romania Slovenia
Note: Calculated from residual method.Source: National Statistical Offices. World Bank Staff Estimates.
10
Pool of labor within ECA…Central Asia, Caucasus, Balkans
* Data are from 2000-2003
11
Losing population to emigration and demographics…Baltics, SE Europe, Poland, Ukraine and
Moldova
* Data are from 2000-2003
12
Declining population despite immigration…Central Europe,
Russia and Belarus
* Data are from 2000-2003
13
It is likely that migration will increase for five main reasons
Differentials in expected quality of life increasingDemand for non-traded services from increasingly affluent and large middle class (demand needs to be factored into policy) Much lower transportation costs (esp. low cost airlines) and easier to keep in touchOnly quick way to build savings and human capitalDemographic decline in Europe and parts of the CIS (especially Russia)-now at an interlude
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Remittances are large as a portion of GDP in many ECA
countries
Tajikistan
Moldova
Armenia
Bosnia and Herzegovina
Serbia and Montenegro
Albania
Kyrgyz Republic
Georgia
Bulgaria
0 5 10 15 20 25 30 35 40
Over 30%Over 20%
Workers Remittances + Compensation of Employees to GDP (2006)
Source: IMF Balance of Payments Statistics
15
Several ECA countries lead the world in remittances receipts
Tajikistan
Moldova
Tonga
Guyana
Lesotho
Lebanon
Haiti
Honduras
Armenia
El Salvador
Jordan
Bosnia and Herzegovina
Jamaica
Serbia and Montenegro
Nepal
Albania
Philippines
Nicaragua
Cape Verde
Kyrgyz Republic
Gambia, The
West Bank and Gaza
Guatemala
Kiribati
0 5 10 15 20 25 30 35 40
Workers Remittances + Compensation of Employees to GDP (2006)
Source: IMF Balance of Payments Statistics.
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The Use of Remittance Transfer Channels Vary…
Use of Remittance Distribution Channels(Pct of Migrants Reporting Use of Channel)
Bank Transfer30%
Post Office7%
Friends/Contacts30%
Informal Transfer Offices
1%
MTOs31%
Debit Card0%
Self Delivery1%
Source: World Bank Surveys.
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Transfer costs can be high
Average Costs and Amounts of Remittance Transfers
0
100
200
300
400
500
600
700
800
Georgia Kyrgyz Republic Bulgaria Bosnia & Herz Romania Tajikistan
US
D
0
1
2
3
4
5
6
7
8
%
AvgRemittanceUSD
Avg Costs(Pct)
Based on Survey Responses of Returned Migrants. Values of bars reflected in USD per the left axis and the value of the line (average costs) reflected in percentages per the right axis.Source: World Bank Surveys.
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The majority of remittances in Central Asia go to fund basic
subsistence
Households' Uses of International Remittances in Georgia, Kyrgyz Rep, and Tajikistan (%)
0
5
10
15
20
25
30
35
40Savings
Investment in Business
Education of children
Food and Clothing
Medical expenses
Education
Buying property
Home repair
Wedding, celebration, funeral
Buying land
Buying a car
Starting a new business
Charity
Other
Source: World Bank Surveys.
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The Presentation
Overview of Migration/Demographics Trends in ECACost-Benefit Analysis of MigrationInternational Regulatory FrameworkPolicies to enhance the returns to migration
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International market for migrant labor has large net benefits…
Sending Countries and MigrantsCan relieve pressures on labor markets when tight Remittances
Migrants remit about 36 percent of their incomesVast majority of Central Asia migrants remit $200 or less at a timeA 10% increase in the share of migrants in a country’s population leads to a 2% reduction in poverty
Human Capital and Savings 26 percent intended to start a business on return70 percent improved job opportunitiesMajority of migrants improved earnings at home after migration
Receiving countries fills labor market shortages and attract new skills
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Yet Migration also generates costs
Costs for receiving countriesNew competition: wages may fall as a result of migrants especially for the lower skills (DeNew/Zimmerman 1994 -0.5% for blue collar from 1 percent increase in migrants)Strain on existing social servicesProblems with integration of foreign workersCriminality
Costs for sending countriesLoss of human capital, especially if migration permanentDisruption to families and communities (may require additional Government services)Criminality
Costs for migrantsHeavy penalty on family life (over half return home due to family related concerns)Costs of leaving familiar and adapting to new culture
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The Presentation
Overview of Migration/Demographics Trends in ECACost-Benefit Analysis of MigrationInternational Regulatory FrameworkPolicies to enhance the returns to migration
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Most legal migration facilitated by bilateral agreements
Bilateral migration agreements proliferated rapidly during the early 1990s
Externalities make bilateral agreements superior to MFN, unlike trade
These agreements form a ‘patchwork’ as their designs vary tremendously and there is little coordination
The majority of agreements cover migration between CEECs and EU15 though a few address migration to Russia
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Problems with the Current Regime
Agreements do not address the full size of the demand for migrant laborSometimes legal quotas unfilled due to high transaction costsCreates incentives for illegal migrationThe system is unbalanced as a few countries account for the majority of the agreementsCurrent system does not encourage circular migration and allows adverse selection and criminal activity
25
The Presentation
Overview of Migration/Demographics Trends in ECACost-Benefit Analysis of MigrationInternational Regulatory FrameworkPolicies to enhance the returns to migration
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Features of an Alternative Regime for Labor Migration
More effectively matches the supply with the demand for international laborReduces rents for traffickersEstablishes transparent rules for remuneration, work conditions, and dismissal proceduresProvides incentives for migrants to be complements, not substitutes, to domestic labor Offers employers means to hire legally the workers they needProvides incentives to encourage return home where permanent migration is not desired
27
One option—among many—for improving policies could be to encourage circular migration…Circular migration would/could:
Utilize migrants and their acquired skills for economic development in sending country
Reduce brain drain because absence is temporary
Probably address some fears in receiving countries about migrants staying permanently
Provide an alternative to full liberalization for receiving countries
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Circular migration is consistent with many migrants’ preferences for short periods of time abroad
0 10 20 30 40 50 60 70 80
Percentage Response
Leave temporarily and fairly soon Leave temporarily without plan to return
Leave for a long time and return Leave Permanently
Source: World Bank Surveys (2007)
29
Policies to lower remittances costs*
Expand access to the formal financial sector (through legal migration)Improve financial infrastructurePromote competition among transfer providersEnhance market transparency on costs
*Input provided by World Bank (2007) “Remittances in the CIS Countries: A Study of Selected Corridors,” ECA Chief Economist’s Regional Working Paper Series, 2, 2, Washington, DC.
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Policy experimentation and pilots could be useful
World Bank is working on implementing pilot migration schemes with several EU member-states
More information and data are available at:
http://www.worldbank.org/eca/migration