Migrant Remittances and Demand for Redistribution
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Migrant Remittances and Demand for Redistribution Jesse Acevedo 1 # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract The literature on the political economy of remittances largely agrees that as households receive income from migrants abroad they will be less dependent on government goods and patronage. The underlying assumption is that remittance inflows are stable and increasing. The global economic recession of 2008 and 2009 led to major declines in remittance inflows. This paper asks two different but related questions: (1) Do remittance recipients support redistribution? and (2) Do preferences for redistribution change following a negative shock to remittances? Using three waves of survey data, I find that remittance recipients diverge from non-recipients in favoring redistribution following the sudden decline in remittances. I test for possible mechanisms such as dependence on remittances and relative income levels to explain this change in preferences. I find that remittance recipients who are more dependent on remittances or not inclined to emigrate are more likely to favor redistribution following the negative shock. Keywords Remittances . Redistribution
Introduction The growth and prominence of remittances to developing countries have attracted attention from political economy scholars. Recent work has analyzed the political consequences of remittances on regime change, voting behavior, and government spending, among others. Scholars largely agree that remittances weaken the relationship between citizens and the state because rising inflows of remittances empower recipient citizens to enter the private market and substitute state provisions. The substitution effect can lead governments to decrease public spending or divert resources away from citizens. The arguments that underlie these works implicitly assume that remittances are stable with prospects of greater increases to income in the near future.
* Jesse Acevedo [email protected]
1
Department of Political Science, University of Denver, Denver, CO, USA
Studies in Comparative International Development
Remittance flows to the developing world have rapidly increased since 1990. By 2008, the global volume of remittances surpassed foreign aid and foreign direct investment as a greater source of income (Abdih et al. 2011). However, the economic recession following the 2008/2009 global financial crisis reduced remittances drastically around the world, hurting those who are dependent on these private transfers. In the USA, the financial crisis left many migrant workers without employment. Consequently, migrants sent fewer remittances to their families during this period. If rising remittances alter the relationship between recipients and their governments, what happens when there is a shock decline? Do citizens revert to their prior views of government? When remittances recover to pre-shock levels, will recipients return to rejecting government goods and services or will the negative shock become a learning experience? Th
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