What are remittances in simple terms?

Money migrants send home to their families.

Do remittances help growth?

They reduce poverty and raise investment, but growth effects depend on financial conditions.

Remittances

📈 Economics By CampusDown Wiki Editorial Team Last updated October 27, 2026

Remittances are the share of earnings that migrants send to family in their country of origin. In many developing countries they exceed foreign aid and direct investment, making them a major topic in development economics.

Contents

1. Motives
2. Poverty and investment
3. Growth debate
4. FAQ
5. References

Motives

Lucas and Stark (1985) found migrants remit out of altruism and also 'contractual' motives such as expected inheritance or repaying migration costs. Rapoport and Docquier (2006) surveyed altruism, insurance, investment and repayment. Remitting is a core practice of transnationalism.

Poverty and investment

Adams and Page (2005) linked remittances to lower poverty, and Yang (2008) used exchange rate shocks to show remittances raise education and business investment, a route out of the poverty trap and into human capital.

Growth debate

Chami and colleagues (2005) argued remittances fund consumption and may reduce work effort, while Giuliano and Ruiz-Arranz (2009) found they aid growth where finance is weak. Yang (2011) stressed lowering transfer costs. Remittances can partly offset brain drain.

FAQ

What are remittances in simple terms?: Money migrants send home to their families.
Do remittances help growth?: They reduce poverty and raise investment, but growth effects depend on financial conditions.

Sources reviewed: 2026-10-26

References

Lucas, R. E. B., & Stark, O. (1985). Motivations to remit: Evidence from Botswana. Journal of Political Economy, 93(5), 901–918. A classic on why migrants remit.
Adams, R. H., Jr., & Page, J. (2005). Do international migration and remittances reduce poverty in developing countries? World Development, 33(10), 1645–1669. Cross-country evidence on poverty reduction.
Chami, R., Fullenkamp, C., & Jahjah, S. (2005). Are immigrant remittance flows a source of capital for development? IMF Staff Papers, 52(1), 55–81. A sceptical view of remittances and growth.
Rapoport, H., & Docquier, F. (2006). The economics of migrants' remittances. In S.-C. Kolm & J. Mercier Ythier (Eds.), Handbook of the economics of giving, altruism and reciprocity (Vol. 2, pp. 1135–1198). Elsevier. A comprehensive handbook survey.
Yang, D. (2008). International migration, remittances and household investment: Evidence from Philippine migrants' exchange rate shocks. The Economic Journal, 118(528), 591–630. Causal evidence on household investment.
Giuliano, P., & Ruiz-Arranz, M. (2009). Remittances, financial development, and growth. Journal of Development Economics, 90(1), 144–152. Remittances aid growth where finance is weak.
Yang, D. (2011). Migrant remittances. Journal of Economic Perspectives, 25(3), 129–152. An accessible overview.

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This article was last updated on October 27, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.