Academic journal article Economics & Sociology

Returned Migrants and Remittances Alleviating Poverty: Evidence from Malang, East Java

Academic journal article Economics & Sociology

Returned Migrants and Remittances Alleviating Poverty: Evidence from Malang, East Java

Article excerpt


Benefits and costs of return migration in developing countries require more scrutiny because the benefits of new ideas, business skills, accumulated savings and assets from the employment abroad contribute to the development of home countries1. Migrants planning to return therefore tend to maintain connections with their home country and send back remittances to improve the living conditions of their relatives and friends, but not all returnees are able to improve these households' welfare because the financial capital gained is not used in a sustainable manner (Adams and Cuecuecha, 2010).

There are two reasons for the research gap in this area: many people perceive international migration to be a one-way movement, and there is not enough data on return migration for macroeconomic assessments (Wahba, 2015). Although there are some studies on the role of remittances in European countries (Leon-Ledesma and Piracha, 2001; Schiopu and Siegfried, 2006; Grigorian and Melkonyan, 2011, and many more), only a few studies focused on the remittances and using the microlevel survey data on the ASEAN countries (Parinduri and Thangavelu, 2011; Nguyen and Purnamasari, 2011) failed to capture the fate of return migrants in this region. Given that many countries worldwide tend to recognise international work contracts and labour migration, return migration today becomes an important phenomenon in the world and in the ASEAN region in particular, so the home countries should enact the policies to capture their skills, knowledge, and savings for the aims of further alleviation of poverty.

Although international labour migration is an important issue for alleviating poverty in Indonesia, almost no attention has been given to empirically analysing the issue of alleviating poverty at its origin. This is mostly due to the scarcity of data resulting from no nationally representative household survey covering information, inter alia, on labour migrants, including those that returned. Moreover, the data published by the government is also very much biased towards low-skilled workers and is highly inaccurate due to high proportion of undocumented labour migrants and also those who are returning and leaving several times (Bachtiar, 2011). The previous empirical studies on the effects that international labour migration has on poverty used the Indonesian Family Life Survey (IFLS) data, but the IFLS does not contain specific questions on the history of migration and remittances (Adams and Cuecuecha, 2010; Parinduri and Thangavelu, 2011). The history of individual migrants would help in assessing the sustainability because remittances and savings improve the quality of life for return migrants.

This study, therefore, focuses on the primary data obtained from our own survey carried out in the Malang district, East Java so that to examine the sustainability of returning migrants over time and how their overall remittances affected the financial condition of the related households2. The previous empirical studies on migration and remittances in Indonesia (such as Parinduri and Thangavelu, 2011) used the present condition of current migrant households and migration status as a proxy for remittances but not the value or magnitude of the remittances.

The remainder of this paper is organised as follows. The second section reviews the nexus between international migration, remittances, and poverty. The third section discusses the data and the methodology used in this paper and then provides empirical results on the poverty status of return migrant households in the fourth section. The final section provides conclusions along with implications.

1. Literature Review

International labour migration has become an important component of the Indonesian economy, to the extent that the number of migrants from Indonesia who work overseas is approaching 7 million in 2015 (or about 5 percent of the labour force), in terms of stock, making it one of the largest sources of labour migrants in Asia, following Sri Lanka and the Philippines (Hugo, 2002). …

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