Financing the Family Remittances to Central America in a Time of Crisis

Interest in learning how to make the most of the potential developmental benefits of remittance flows has grown worldwide, but few attempts have been made to summarize existing knowledge in a way that is easy to digest. Financing the Family adds to that body of knowledge with a summary of recent research that emphasizes experimental approaches, focuses on Central America, and analyzes the impact of the recent financial crisis. It finds that while remittances generate many benefits for both migrants and their families back home, the long-term effects of migration on social cohesion and child welfare demands further study. The book also explores how to enhance the development impact of remittances through innovative financial instruments that give migrants greater control over the money they send home. Finally, the book exposes the vulnerability of Central American countries to a weaker U.S. economy. It demonstrates how focusing on the sectors and states where migrants are concentrated can allow for better policy responses in the face of economic downturns.

The Inter-American Development Bank (IDB), established in 1959 to support the process of economic and social development in Latin America and the Caribbean, is the main source of multilateral financing in the region. The IDB Group provides solutions to development challenges by partnering with governments, companies and civil society organizations, thus reaching its clients ranging from central governments to city authorities and businesses. It also offers research, advice and technical assistance to support key areas including education, poverty reduction and agriculture as well as cross-border issues such as trade, infrastructure and energy.

Gabriela Inchauste is Senior Economist in the Poverty Reduction and Equity Department of the World Bank. Prior to joining the World Bank, she worked as a Senior Economist at the International Monetary Fund and the Inter-American Development Bank where she contributed to operational and analytical activities in a number of countries on topics including macroeconomic forecasting, public expenditure policy, poverty and social impact analysis, fiscal and debt sustainability analysis, post-disaster needs assessments, and subsidy reform. She has published articles in academic volumes and journals on fiscal policy and decentralization, the impact of crises on the poor, and the informal sector. She has contributed to a number of World Bank Poverty Assessments, Public Expenditure Reviews, and the recent World Development Report on Jobs. Her current work focuses on decomposing the contributions to poverty and inequality reduction. Gabriela holds a Ph.D. in economics from the University of Texas at Austin.

Ernesto Stein is Senior Advisor in the Research Department. He has also been the Regional Economic Advisor in the Country Department of Belize, Central America, Mexico, Panama and the Dominican Republic at the IDB and a Growth Fellow at Harvard University's Center for International Development. He has published five books and more than 30 articles in edited volumes and specialized journals, including, the Journal of International Economics, the Journal of Development Economics, Economic Policy, Economics and Politics, and the American Economic Review (papers and proceedings). His areas of expertise include international trade and integration, foreign direct investment, productive development policies, institutional economics and political economy. In these last two areas, he coordinated a research team that produced the 2006 edition of the IDB Development in the Americas report, The Politics of Policies. A native of Argentina, Dr. Stein holds a Ph.D. in Economics from the University of California at Berkeley.

1. Introduction; Gabriela Inchauste and Ernesto Stein
2. Migration, Remittances, and Economic Development: A Literature Review; Dean Yang
3. Enhancing the Impact of Remittances on Development: New Evidence from Experiments among Migrants from El Salvador; Dean Yang
4. US Migrant Employment and Remittances to Central America: A Cointegration Approach; Gabriela Inchauste, Cesar Liendo and Ernesto Stein
5. Remittances and Poverty in the Context of Economic Crisis: Honduras and El Salvador; Viviane Azevedo, Cesar P. Bouillon, and Marcos Robles
6. Trends in Economic Outcomes for Salvadoran Migrants and Their Remittance Recipients during the US Economic Crisis: Insights from the El Salvador Survey of Migrant Families; Diego Aycinena, Sebastian Calonico, Gabriela Inchauste, Claudia Martinez and Dean Yang