Brexit harms migrant workers, and their families back home – my work cited in the Washington Post

The UK’s decision to exit the EU (“Brexit”) has stunned the world. Development junkies want to know: how will Brexit affect developing countries?

In an article in the Washington Post, Max Ehrenfreund makes some predictions: foreign aid flows from the UK will decline, as will remittances sent home by migrants in the UK. The article cites my work on how remittances sent by Filipino migrants responded to the exchange rate shocks of the Asian Financial Crisis, and what happened to remittance-recipient families back home as a result. With Brexit leading the British pound to weaken, remittances from migrants in the UK should fall, and families back home are likely to suffer. If the results from my study of Philippine migrants apply, then we should expect increases in child labor and declines in school attendance in the families of UK-based migrant workers.

My Philippine remittance research, cited in The Economist

I was pleased to see that my research on the impact of migrant remittances in the Philippines was mentioned in this week’s edition of The Economist. The article, “Like Manna from Heaven”, highlights the positive impacts that migrant remittances can have on migrants’ home countries. It describes results from my 2008 paper on the impact of the Philippine peso devaluation during the 1997 Asian Financial Crisis, which dramatically increased the value of remittances coming in from overseas (mostly from migrant earnings in currencies that were less affected by the crisis). Some of the Filipino migrants working overseas at the time (in, say Saudi Arabia and other parts of the Middle East) saw the value of their overseas earnings rise by over 50% when converted to Philippine pesos.

In the paper I show that this increase in the peso-value of migrant remittances had a wide range of beneficial impacts in remittance-receiving households (over the course of the next 15 months or so). Child labor fell, and child school attendance rose. Households invested more in capital-intensive microenterprises, and worked more hours on those enterprises. They also ended up with higher ownership of vehicles, many of which are probably used in transportation-related microenterprises (e.g., jeepneys and motorized tricycle taxis, if you know the Philippines).

I continue to be amazed and honored that people find this paper useful, given that it had its genesis as a lowly dissertation chapter from my 2003 Ph.D. dissertation

Much of the article is about migration from Kerala, India. It turns out I’ve also done work on migrants from Kerala, in collaboration with Ganesh Seshan (Georgetown SFS-Qatar).

Published version of paper now available: “Savings in Transnational Households: A Field Experiment among Migrants from El Salvador”

The final, published version of my paper in the Review of Economics and Statistics has just come out in the May 2015 issue. My co-authors on the paper are Nava Ashraf, Diego Aycinena, and Claudia Martinez A.

We conducted a randomized experiment among migrants from El Salvador in the Washington, DC area, where we studied how we might stimulate savings in El Salvador with newfangled savings products. We found that when we offered migrants savings accounts that they could jointly own with family members in El Salvador, or accounts they could own solely in their own names, migrants saved substantially more in El Salvador. Savings at our partner bank in El Salvador (Banco Agricola) went up by over 250%, compared to the control group. (Complementary survey data suggest this is a true increase in savings, not just a shift from other banks or other forms of savings.)

The big takeaway from the study is that international migrants value the ability to monitor and control how money is used by their remittance recipients (mostly family members) in the home country. In particular, giving migrants more monitoring and control over savings leads them to save more in their home country.

We very much hope these findings influence financial institutions and policy-makers when they design remittance-related products or interventions aimed at raising savings in developing countries. We’ve been particularly pleased that our findings have been embraced at the Inter-American Development Bank (one of our funders), for example in the Remittances and Savings Program of their Multilateral Investment Fund (FOMIN in Spanish).

This work ended up stimulating later work of mine (which ended up being published earlier!) on migrant control over educational spending in their home countries, among migrants from El Salvador and the Philippines. It also ended up motivating a study of mine in urban Mozambique showing that gift-givers care about the composition (and not just the level) of expenditures of gift-recipients.

It’s been a long haul! We conceived of this project in 2006, secured initial funding from the Inter-American Development Bank that year, and started the fieldwork in 2007. With additional funding from the National Science Foundation, the MacArthur Foundation, the University of Michigan, and Harvard, we completed the endline fieldwork in 2009, and tracked savings at the partner bank through 2012. Given how long it took, it’s definitely not the type of project I’d recommend to graduate students or faculty on the tenure track (although I was still an assistant prof when I started it!)…


Two presentations in Stockholm next week

I’m headed to Stockholm where I’ll be giving two presentations at the Stockholm School of Economics next week. Anders Olofsgård at the Stockholm Institute of Transition Economics (SITE) invited me.

On Monday, May 11, I’m presenting at the “Finance for Sustainable Development” conference, which is co-organized by Sweden’s Ministry for Foreign Affairs. The conference is a prelude to Sweden’s participation in the International Conference on Development Finance (in Addis Ababa) in July. My presentation is on “Migration, Remittances, and Economic Development,” and I’ll be covering existing evidence on the development impact of migration and remittances, as well as some evidence about remittance policies that might promote development in migrant-origin countries. This should be a good chance to influence the Swedish government’s thinking about remittance-related development policies.

On Tuesday, May 12, at the Institute’s brown-bag lunch, I’m presenting my Mozambique savings-and-subsidies paper. Looking forward to the discussion and the feedback, as this is very much a work in progress.

New press coverage in PBS News Hour and Huffington Post

The main reason I became an academic was to influence thinking about economic development, so I am always happy to speak with journalists and policy-makers about things I work on. I happen to have spoken in relatively quick succession in recent weeks with a couple of journalists who paid me the honor of citing my work in their writings.

The other week, I spoke with Laura Santhanam of PBS News Hour on a piece she was writing on the economic development benefits of migrant remittances. It’s a great article that combines data, research, and a great hook in the form of Dilip Ratha‘s start as an immigrant sending remittances home to his family in India. She cites work of mine on directing remittances towards savings in migrants’ home countries.

And on Monday I shared my views with Jonathan Cohn (who happens to be a friend here in Ann Arbor) of the Huffington Post on new data the World Bank has just released on access to financial services worldwide. Jonathan’s take (with which I agree) is that while rising access to financial services is a great thing, the gender gap in financial access (women’s access continues to lag behind men’s) remains troubling. He cites papers of mine on the positive impacts of facilitating formal savings access for rural households in Malawi and Mozambique.

Just released: my encyclopedia article, “International Migration and Remittances”

My article, “International Migration and Remittances,” has just been released by the International Encyclopedia of Social and Behavioral Sciences (2nd edition). Here’s the abstract:

The remittances that migrants send to origin countries are one of the largest types of international financial flows to developing countries. This article reviews the relationships between remittances and the economic development of the world’s poorer nations. It first reviews the definition, magnitude, and some basic characteristics of remittance flows. Then, it treats the motivations for remittances, the impacts of remittances on development outcomes, and their role in helping respond to adverse shocks. It concludes with thoughts about the immediate future of remittances and promising areas for future research on the topic.

For the official version, you’ll have to purchase the print version of the encyclopedia for about $11,000 (!), or access it online via your institutional subscription.

Thankfully, you can also access the unofficial (pre-publication) version here, which is identical in content but not as nicely formatted.


Forthcoming in JEBO: “Directed Giving”

I was happy to hear today that a paper of mine, “Directed Giving: Evidence from an Inter-Household Transfer Experiment,” has been accepted at the Journal of Economic Behavior and Organization. My co-authors on the paper are Catia Batista (Nova University, Lisbon) and my former colleague Dan Silverman (Arizona State). The working paper version is here.

We ran a lab-in-the-field experiment in urban Maputo, Mozambique, among clients of a microfinance bank. We had each study participant designate a “counterpart,” the closest person to them outside their own household. (Most people named a sibling, friend, cousin, child, or parent.) Then we had participants play “dictator games,” a common type of lab experiment in economics where the respondent splits a certain “pot” of money between themselves and someone else (for keeps!). The amounts that the participants had to split ranged from $10-$40 (substantial sums in Mozambique.) We found that participants shared more of their “pot” with their counterpart when they had the option of sharing the resources in-kind (in the form of items that they chose) instead of just in cash. In other words, when participants had the option of making a gift to their counterpart in the form of goods, they shared more overall than if they could only share in cash.

To be specific, participants shared about 40% of the pot when they could only share in the form of cash with the counterpart. But when participants could share in the form of goods as well as cash, they shared 45% of the pot (and the difference is statistically significant).

Participants could choose to share whatever goods they wanted with counterparts (we would do the shopping for them and deliver the goods), and were most interested in sharing building materials…

What do we take away from these results? When people think about making gifts or transfers to others, they care about what specifically gift-recipients are consuming (the composition of their consumption), not just about their level of consumption. Gift-givers may get more utility from giving when they know recipients are going to consume certain specific things.

An implication is that having an ability to control what gift-recipients consume may lead to more giving. I consider this issue a lot in other research of mine among migrant populations, where I look at the impact of giving migrants more control over how remittances are used in recipient households. See, for example, recent papers of mine on channeling remittances to education in the Philippines, or getting remittance-recipient households to save more.

Forthcoming in EDCC: “Facilitating Savings for Agriculture”

We just got the good news that a savings experiment of ours will be published in Economic Development and Cultural Change: “Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi.” My co-authors on the paper are my former graduate students Lasse Brune (Yale) and Jessica Goldberg (U. Maryland), and my long-time co-author (and running buddy) Xavi Gine (World Bank DECRG). The working paper version is here.

In this experiment, we randomly assigned farmers in Malawi to being offered commitment or ordinary savings accounts at Opportunity Bank (also, a randomly-selected control group was not offered savings services, but tracked in the same way). We found that the farmers offered savings accounts later raised their agricultural input use, farm output, and household consumption levels by more than the control group. Unfortunately we do not have the statistical power to say whether the commitment savings treatment had higher impacts than the ordinary savings treatment, so all we can say is that getting offered some savings treatment had positive impacts. This is the first study (to our knowledge) to provide evidence of positive impacts of a savings facilitation intervention on agricultural outcomes of rural households.

My “facilitating migration” work featured in the World Bank Research Digest

My work with Emily Beam (my former Ph.D. student) and David McKenzie is featured in the Winter 2015 issue of the World Bank Research Digest. Here’s the link. It’s a good non-technical summary.

The full paper, “Unilateral Facilitation Does Not Raise International Migration from the Philippines,” is forthcoming in the journal Economic Development and Cultural Change.

Published version of paper now available: “Directing Remittances to Education Using Soft and Hard Commitments”, in JEBO

The final, published version of my new paper in the Journal of Economic Behavior and Organization is now available online at Science Direct, ungated until Mar. 19, 2015. You can access the paper here.

The paper is “Directing Remittances to Education using Soft and Hard Commitments: Evidence from a Lab-in-the-field Experiment and New Product Take-up among Filipino Migrants in Rome,” joint with Giuseppe de Arcangelis, Majlinda Joxhe, David McKenzie, and Erwin Tiongson.