F24 - RemittancesReturn

This study aims to investigate the impact of international remittances on income inequality in the post-communist region. The association between the variables is examined via static and dynamic panel models. Using macroeconomic data from 27 countries over the period 1991-2014, we discover that income inequality progresses along a U-shaped course as a country becomes more dependent on remittances. For most of the countries, the relationship between remittances and inequality is inverse. When remittances account for more than 20% of GDP, they exacerbate economic inequality. This finding challenges the view that remittances should only be viewed as a pro-poor redistribution mechanism because in certain cases, additional migrant transfers may actually increase income inequality.

Migration of population has been a significant feature of the international economy for a long time. It is an important source of income, foreign exchange and workforce for a large number of economies. The most studies dealing with the international migration consider it as efficient instrument for developing countries, because inflow of money (through remittances) has a positive impact on their economy. However, on the other hand, economically developed countries are threatened by outflow of money abroad. From this perspective, remittances may have negative consequences on the economy. This issue connected with remittances is very often neglected. The Czech Republic and most developed European countries are the immigration countries. It means that many foreigners come here because of work or study, especially from nonEU countries. The paper focuses on rarely discussed issues of migration standing on the border between demographics and economic statistics. It deals with positive and negative aspects of labour immigration with the specific focus on foreigners' behaviour - incomes, expenditures, savings and remittances. It is aimed to determine specific impact of migration and remittances on the economy of the Czech Republic.

This paper examines the effectiveness of remittances and official development assistance (ODA) in developing countries. It compares the outcomes of aid poured into the economies of the Third World for decades without any visible effect and remittances transferred by emigrants to their countries of origin which proved to be quite effective. We find that remittances have a stronger net positive effect on the increase of GDP per capita in developing economies than development aid. In addition, remittances tend to be higher than ODA funds, they are absorbed by 80-90 per cent (in comparison with 50 per cent of aid budgets spent on administrative and other costs) and do not hinge on institutional quality. The paper advocates the importance of remittances over ODA and supports the wide usage of coherent development policies executed by the developed Western economies with an aim to enhance transparent and efficient remittance transfers as one of the best methods to promote development in less-developed countries (e.g. economies in Africa, Asia or Latin America).