Academic journal article Migration Letters

The Impact of Migrant Workers' Remittances on the Living Standards of Families in Morocco: A Propensity Score Matching Approach

Academic journal article Migration Letters

The Impact of Migrant Workers' Remittances on the Living Standards of Families in Morocco: A Propensity Score Matching Approach

Article excerpt

Abstract

This article attempts to assess empirically the impact of remittances on household expenditure and relative poverty in Morocco. We apply propensity score matching methods to the 2006/2007 Moroccan Living Standards Measurement Survey. We find that migrants' remittances can improve living standards among Moroccan households and affect negatively the incidence of poverty. The results show a statistically significant and positive impact of hose remittances on recipient households' expenditures. They are also significantly associated with a decline in the probability of being in poverty for rural households; it decreases by 11.3 percentage points. In comparison, this probability decreases by 3 points in urban area.

Keywords: Poverty; remittances; propensity score matching; Morocco.

Introduction

For several decades the fight against poverty has become a major policy concern for national governments and international institutions. The Millennium Declaration of the United Nations (2000) has placed the fight against poverty at the center of development policies. Morocco committed -like all other signatories of this statement- itself to achieve measurable targets by 2015, among them the fight against poverty1. While some progress has been made in the eradication of extreme poverty, continuous and very substantial efforts are still needed to fight poverty and accelerate measures in areas of education, health, gender equality, etc. But according to a fairly large body of literature, private and public transfers often constitute a significant component of total household income and thus contribute to the reduction of income poverty and to the increase of the investment in human capital in certain developing countries. This is the case, for example, of private transfers from migrant workers. In general, a rich literature on welfare impacts of these private transfers highlights their positive effect on the poverty reduction in the counties of origin by increasing household income and smoothing consumption (see for example Adams, 1991, Brown and Jimenez, 2007, Acosta et al., 2007, Gubert et al., 2010, Combes et al., 2011, Esquivel and Huerta-Pineda, 2006, Adams and Page, 2005). At macrolevel, Anyanwu and Erhijakpor (2010) have used a panel data set on poverty and international remittances for 33 African countries to examine the impact of international remittances on poverty reduction over the period 1990-2005. They found that international remittances reduce incidence, depth and severity of poverty in African countries. Adams and Page (2005), in their broader analysis of the impact of international migration and remittances on poverty indicators in 71 developing countries, showed that a 10 percent increase in the proportion of international migrants in the country of origin leads to a 2.1 percent fall in the number of people living on less than 1 US$ a day. Similar conclusions were also drawn at the micro-level by Adams (1991). The author finds that in Egypt the number of poor rural households declines by 9.8 percent when they receive international remittances. However, the link between international migration and poverty needs to be probed especially if a majority of migrants come from the wealthiest households because migration is selective on age, gender, wealth, etc. It is argued that the migration selective process is one of the key determinants of returns to international migration and thus its effect on poverty reduction. In reality, as De Haas (2007) suggests, if migration is a selective process, most direct benefits of remittances are also selective, tending not to flow to the poorest members of communities. In other words, if the migrants are not being drawn from the lowest quintiles of the income distribution in their country of origin, the impact of migration on poverty might not be direct and immediate and its effects on structural poverty are likely to occur through substantial indirect effects (Kapur, 2004). …

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