Remittances of earnings for immigrants
Remittances of earnings for immigrants refer to the money or goods sent back to relatives and friends in their home countries, often providing crucial financial support for families in less affluent nations. This practice is particularly common among immigrants from Latin America and the Caribbean, with the United States being the largest source of remittances globally. Many immigrants send a few hundred dollars monthly using various methods, including wire-transfer companies and digital apps, which have seen significant growth in usage in recent years.
Remittances play a vital role in the economies of recipient countries, with substantial sums contributing to local development, poverty alleviation, and household expenses such as food and education. For instance, Mexico is one of the largest beneficiaries, receiving over $52 billion from the U.S. alone. However, the practice has sparked debate; while it fosters connections between immigrants and their home communities, critics argue that it may drain resources from the U.S. economy and create dependency in recipient countries.
Overall, remittances represent a significant aspect of the immigrant experience, reflecting the complex relationships between migration, economic support, and global financial dynamics. As immigration policies evolve, the trend of remittances is likely to be influenced by broader economic conditions and labor market demands.
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Remittances of earnings for immigrants
DEFINITION: Money or goods sent by immigrants to relatives and friends in their home countries
SIGNIFICANCE: The ability to send substantial financial assistance to friends and relatives at home has been a strong incentive for both legal and illegal immigration to the United States. Remittances have also become an important component of global financial markets, and the substantial sums received in some impoverished countries often make important contributions to the local economies.
The sending of part of one’s wages to friends or family back home, known as remittances, is a common practice for many immigrants, especially those from Latin America and the Caribbean. Remittance-sending is a worldwide practice, but the United States leads the world in the total amounts of money annually sent out of the country by its immigrant residents. Many legal and illegal immigrants come to the United States from poorer countries not merely to better their own economic condition but also to contribute to relatives in their homelands.
Immigrants who send remittances typically send a few hundred dollars per month, using both formal and informal financial channels. Popular methods have included deliveries made in person during home visits, regular postal services, and wire-transfer companies such as Western Union and MoneyGram. Immigrants are often reluctant to deal with banks and credit unions to send remittances because of problems with their own immigration status or a lack of required identification documents. In the 2020s, digital apps became a popular method to transmit remittances. In 2017, the number of digital app users was estimated at 5.33 million. This number had nearly tripled to 14.39 million by 2023 and was projected to achieve the 15.8 million mark the following year.
The amounts of money sent in remittances tend to fluctuate with changing immigration policies, dropping during times of immigration restrictions. However, the general trend has been steady growth over the years. Sending remittances has become so popular that it has inspired the development of a sizable international remittance market. At the same time, many poor and developing countries have come to rely on remittances from the United States as key sources of hard currency and development capital, especially in Latin America, the Caribbean, India, and the Philippines. Mexico is the largest beneficiary of remittances sent from the United States. Remittance money provides a major source of income for many families in Mexico, giving Mexico a strong incentive to encourage the United States to loosen its restrictions on immigration. Recipients of remittances use the money for basic necessities such as food, clothing, and housing costs as well as for educational purposes and to build savings.
The popularity of remittances among U.S. immigrants has had both positive and negative impacts. Remittances provide an incentive to immigration and allow immigrants to maintain close links with family members back home. However, critics have argued that immigrants cost American workers needed jobs and their remittances drain money from the U.S. economy that should be spent within the United States. An additional criticism is that remittances can promote a dependence on outside charity without contributing to local development.
In 2023, the total of global remittances was estimated at $860 billion. The greatest amount of remittances originated in the United States. This figure was $93.03 billion and dwarfed the next largest country, Saudi Arabia ($38.39 billion). Switzerland ($35.66 billion) was the third largest source of remittances. India was the country that took in the highest inflow of global remittances at $125 billion. This represented 3 percent of its GDP. The largest source of funds sent to India came from Australia ($3.9 billion). Mexico received the most amount of funds ($52.6 billion) from US sources and made up more than half off all remittances issued from America.
Following the COVID-19 pandemic that began in 2020, the US economy contracted and the demand for labor fell, resulting in a drop in immigration. The US economy recovered in the subsequent years and was followed by a sharp increase in immigration. As such, remittances to Latin America increased to $156 billion by 2023, a growth of 8 percent. The slowing 2024 US job market was expected to result in a decline in the growth rate of remittances.
Bibliography
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