Remittances of earnings Summary

  • Last updated on November 10, 2022

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 American immigrants;remittancesLatin America and the West Indian immigrants;remittancesCaribbean. 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.Remittances of earningsRemittances of earnings[cat]FAMILY ISSUES;Remittances of earnings[cat]ECONOMIC ISSUES;Remittances of earnings

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.

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;remittancesPhilippines. Mexico;remittancesMexico 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.Remittances of earnings

Further Reading
  • Borjas, George J., and Richard B. Freeman. Immigration and the Work Force: Economic Consequences for the United States and Source Areas. Chicago: University of Chicago Press, 1992.
  • Maimbo, Samuel Munzele, and Dilip Ratha. Remittances: Development Impact and Future Prospects. Washington, D.C.: World Bank, 2005.
  • Özden, Caglar, and Maurice W. Schiff, eds. International Migration, Remittances, and Brain Drain. Washington, D.C.: World Bank, 2005.

Economic consequences of immigration

Economic opportunities

Employment

Globalization

Honduran immigrants

Latin American immigrants

Mexican immigrants

Pacific Islander immigrants

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