the global economic crisis, migration, and remittance flows to armenia: implications for poverty
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The Global Economic Crisis, Migration, and Remittance Flows to Armenia: Implications for Poverty. International Conference on Migration Yerevan, Armenia June 24-25, 2010. Armenia was one of the hardest hit countries by the 2008-09 global economic crisis. - PowerPoint PPT PresentationTRANSCRIPT
Europe and Central Asia Region, The World Bank
The Global Economic Crisis, Migration, and Remittance Flows to Armenia: Implications for Poverty
International Conference on MigrationYerevan, ArmeniaJune 24-25, 2010
Europe and Central Asia Region, The World Bank
Armenia was one of the hardest hit countries by the 2008-09 global economic crisis
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Europe and Central Asia Region, The World Bank
The impact of the crisis was most severe on the construction sector
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Europe and Central Asia Region, The World Bank
The main transmission channels of the global economic crisis
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Impact on Household
Wealth
Impact on Household
Wealth
Europe and Central Asia Region, The World Bank
The crisis affected all income groups more broadly
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Europe and Central Asia Region, The World Bank
Armenia avoided substantial potential increase in poverty during the crisis
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Europe and Central Asia Region, The World Bank
Reason #1 for avoiding worse outcomes: Public mitigation response measures
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More Households Relied on Government Support than other Coping Strategies
Poverty reducing impact of the public transfers increased
Europe and Central Asia Region, The World Bank
Reason #3: Households’ own coping strategies
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Europe and Central Asia Region, The World Bank
Reason #3: Resilience of remittance flows, particularly those from non-migrant resources, and high incidence of
remittances among the poor
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Europe and Central Asia Region, The World Bank
Who benefits from migration and remittances? International Experience
Individuals and Families:As migrants tend to come typically from non-poor
households, direct beneficiaries are lower-middle to middle-income families
The poor could benefit from remittances mainly in subsequent rounds via multiplier effects
Local EconomyIncreased consumption and investment spending.
National EconomyLarge share of GDPSource of foreign exchange
Europe and Central Asia Region, The World Bank
Migration, remittances and poverty impact
Migration:Why do people migrate (within or outside home country)Where are the destinations?What are their main economic activities at the
destination?What are the characteristics of migrants (origin,
education, age, gender, etc.)
Remittance flows:Sources, sizeTo whom they accruePoverty Impact
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Europe and Central Asia Region, The World Bank
After a steady increase, migrant workers abroad decreased in 2009 …
Europe and Central Asia Region, The World Bank
….but internal migration surged, particularly out of Yerevan
Europe and Central Asia Region, The World Bank
Construction is the main sector of employment for Armenia’s migrants abroad (2009)
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Europe and Central Asia Region, The World Bank
Migrants have similar education profile and are predominantly men
Europe and Central Asia Region, The World Bank
Russia is the destination for most Armenian migrant laborers
Europe and Central Asia Region, The World Bank
The share of migrants to Russia decreased; to Yerevan and marzs increased during the crisis
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Europe and Central Asia Region, The World Bank
Receipts of non-migrant remittances increased; those from migrants decreased
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Europe and Central Asia Region, The World Bank
Amount of remittance flows decreased overall (9%), but increased for non-migrant households (15%).
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All Households
Households Receiving Remittances
All Migrant Non-migrant2005 6,175 31,475
49,118 25,394
2006 6,431 34,914 50,774 26,909 2007 9,033 4,428
65,338 32,860
2008 10,147 47,387 63,587
35,297
2009 9,217 46,605 61,240 40,679 Change (2008-09) -9% -2% -4% +15%
(AMD per household per month)
Migrant remittances larger than non-migrant remittances, but less frequent
Europe and Central Asia Region, The World Bank
Official remittances declined by over $330 million (or 31 percent)
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Europe and Central Asia Region, The World Bank
In the absence of remittances, poverty incidence would be considerably higher
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Importance of remittance increased during the crisis, esp. in Yerevan
Europe and Central Asia Region, The World Bank
Huge poverty reduction impact among remittance recipients (poverty continued to decline
despite the crisis)
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Remittances do appear to be going to some of the most vulnerable households in Armenia!
Europe and Central Asia Region, The World Bank
Remittance receiving households tend to have lower labor or other earnings
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Source of Income
Households Not Receiving
Remittances
Households Receiving
Remittances(a) (b) (b/a) (%)
Wage 77,018 28,419 37Self
employment 6,149 2,703 44
Pension 19,886 14,043 71
Family Benefit 3,112 2,795 90
Agriculture 5,168 1,612 31
(AMD per household per month)
Europe and Central Asia Region, The World Bank
…but households receiving remittances do spend more on education, health and other goods and services
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Source of Income
Households Not Receiving
Remittances
Households Receiving
Remittances
(a) (b) (b/a) (%)
Health
7,957 10,011 126
Education
3,269 5,593 171
Household Goods
7,413
7,650 103
Durables
10,493
10,849 103
Clothing 4,396 5,909 134
(AMD per household per month)
Europe and Central Asia Region, The World Bank
Remittance receiving households have higher rate of saving, esp. in rural areas
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Europe and Central Asia Region, The World Bank
Summary and final remarks
There was appreciable decline in external migration, and increase in both internal and external return migrationMost are destined to Russia (80%) and mainly engaged in
the construction sector (85%) Although decreased, remittance flows remained
relatively more resilient A significantly larger share of households receive
remittances (>60%) from individuals outside of the immediate familyIncidence of non-migrant remittances increased during the
crisis…but the amount of non-migrant remittances are smaller
than migrant remittances
Europe and Central Asia Region, The World Bank
Summary and final remarks (2)
Remittances play an important role in poverty reduction and accrue to some of the poorest and most vulnerable householdsHuge poverty reduction impact on recipientsHigher rate of savingsMore spending on education, health and other goods and
services
…but there is evidence that remittance flows may discourage labor supplyRemittance recipient households borrow less