The Impact of the Remittances in Latin America

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Introduction

In Latin America migration and remittances have become structural features in the economy, the society, and in the political environment; due to the underdevelopment and inequality of the region. Because they relative importance, trends in migration and the impact of remittances in population of Latin America are the main topics that we will analyze in this research focusing on reduction of poverty and inequality.

This research will aim to answer the next: Do remittances finance development in the region? Do they contribute to reduce poverty? Do they increase the inequality or help to reduce it? Do remittances are used only for consumption or they promote investment in a positive way?

In order to reach the objective and answer those questions, a revision of the specialized bibliography will be performed. Our main hypothesis is that remittances have a positive impact in the general economy and they have contributed to the reduction of poverty and inequality in Latin America. We expect to find that the migrants’ profiles have change during the last years becoming income and educational selective modifying the volume and the quantity of remittances.

We will also explore the impact of remittances on macroeconomic variables like poverty, inequality, investment and some microeconomic issues: educational attainment, health outcomes, labor supply and entrepreneurship.

The document is divided as follows: in the first section we present some literature about the effects of remittances in the macro-level and micro-level; then, we review some migration facts of the region paying attention to the different profiles of the recipients in order to get a better understanding of Latin American migration flows towards develop...

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...ion from Latin America to Europe: trends and policy challenges. IOM Migration Research Series.

Ratha, D. (2005). Workers’ remittances: an important and stable source of external development finance.

Stark, O., Taylor, J., & Yitzhaki, S. (1986). Remittances and Inequality. Economic Journal 96 (383), 722-740.

Simmons, A., Diaz Briquets, S., & Laquian, A. A. (1977). Social change and internal migration. A review of research findings from Africa, Asia, and Latin America.

Taylor, J. (1992). “Remittances and Inequality Reconsidered: Direct, Indirect, and Intertemporal Effects.” Journal of Policy Modeling 14: 187–208.

World Bank. (2005). Global Economic Prospects: Economic Implications of Remittances and Migration. Washington, DC: World Bank.

World Bank. (2006). Global Economic Prospects: Economic Implications of Remittances and Migration. Washington, DC: World Bank.

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