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The Global Economic Crisis, Migration, and Remittance Flows to Armenia: Implications for Poverty

The Global Economic Crisis, Migration, and Remittance Flows to Armenia: Implications for Poverty. International Conference on Migration Yerevan, Armenia June 24-25, 2010. Armenia was one of the hardest hit countries by the 2008-09 global economic crisis.

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The Global Economic Crisis, Migration, and Remittance Flows to Armenia: Implications for Poverty

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  1. The Global Economic Crisis, Migration, and Remittance Flows to Armenia: Implications for Poverty International Conference on Migration Yerevan, Armenia June 24-25, 2010

  2. Armenia was one of the hardest hit countries by the 2008-09 global economic crisis

  3. The impact of the crisis was most severe on the construction sector

  4. The main transmission channels of the global economic crisis Impact on Household Wealth Global Economic Crisis

  5. The crisis affected all income groups more broadly

  6. Armenia avoided substantial potential increase in poverty during the crisis

  7. Reason #1 for avoiding worse outcomes: Public mitigation response measures More Households Relied on Government Support than other Coping Strategies Poverty reducing impact of the public transfers increased

  8. Reason #3: Households’ own coping strategies

  9. Reason #3: Resilience of remittance flows, particularly those from non-migrant resources, and high incidence of remittances among the poor

  10. Who benefits from migration and remittances? International Experience • Individuals and Families: • As migrants tend to come typically from non-poor households, direct beneficiaries are lower-middle to middle-income families • The poor could benefit from remittances mainly in subsequent rounds via multiplier effects • Local Economy • Increased consumption and investment spending. • National Economy • Large share of GDP • Source of foreign exchange

  11. Migration, remittances and poverty impact • Migration: • Why do people migrate (within or outside home country) • Where are the destinations? • What are their main economic activities at the destination? • What are the characteristics of migrants (origin, education, age, gender, etc.) • Remittance flows: • Sources, size • To whom they accrue • Poverty Impact

  12. After a steady increase, migrant workers abroad decreased in 2009 …

  13. ….but internal migration surged, particularly out of Yerevan

  14. Construction is the main sector of employment for Armenia’s migrants abroad (2009)

  15. Migrants have similar education profile and are predominantly men

  16. Russia is the destination for most Armenian migrant laborers

  17. The share of migrants to Russia decreased; to Yerevan and marzs increased during the crisis

  18. Receipts of non-migrant remittances increased; those from migrants decreased

  19. Amount of remittance flows decreased overall (9%), but increased for non-migrant households (15%). (AMD per household per month) Migrant remittances larger than non-migrant remittances, but less frequent

  20. Official remittances declined by over $330 million (or 31 percent)

  21. In the absence of remittances, poverty incidence would be considerably higher Importance of remittance increased during the crisis, esp. in Yerevan

  22. Huge poverty reduction impact among remittance recipients (poverty continued to decline despite the crisis) Remittances do appear to be going to some of the most vulnerable households in Armenia!

  23. Remittance receiving households tend to have lower labor or other earnings (AMD per household per month)

  24. …but households receiving remittances do spend more on education, health and other goods and services (AMD per household per month)

  25. Remittance receiving households have higher rate of saving, esp. in rural areas

  26. Summary and final remarks • There was appreciable decline in external migration, and increase in both internal and external return migration • Most are destined to Russia (80%) and mainly engaged in the construction sector (85%) • Although decreased, remittance flows remained relatively more resilient • A significantly larger share of households receive remittances (>60%) from individuals outside of the immediate family • Incidence of non-migrant remittances increased during the crisis • …but the amount of non-migrant remittances are smaller than migrant remittances

  27. Summary and final remarks (2) • Remittances play an important role in poverty reduction and accrue to some of the poorest and most vulnerable households • Huge poverty reduction impact on recipients • Higher rate of savings • More spending on education, health and other goods and services • …but there is evidence that remittance flows may discourage labor supply • Remittance recipient households borrow less

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