Remittances and Household Welfare: A Case Study of Bangladesh
Household Surveys and the New Definitions of Remittances Michael Mann Expert Group Meeting on the...
Transcript of Household Surveys and the New Definitions of Remittances Michael Mann Expert Group Meeting on the...
Household Surveys and the New Definitions of Remittances
Michael MannExpert Group Meeting on the Contribution of
Household Surveys to Measuring RemittancesJanuary 14-15, 2008
2www.bea.gov
BEA’s Remittances Estimates in Context
$9
$27
$33
$0
$5
$10
$15
$20
$25
$30
$35
Personal Transfers US Government Grants Compensation ofEmployees
US International Transactions Accounts in
2006 (billions of US dollars)
3www.bea.gov
Overview
The new definitions of remittances
U.S. experience in compiling remittances
“Translating” new definitions to surveys
Information needed from household surveys: priorities, and the limitations of survey data
4www.bea.gov
New Definitions: Background
Technical Sub-group on Movement of Natural Persons (TSG) charged with clarifying definitions and concepts associated with remittances in 2005
The TSG’s recommended definitions have been incorporated into the draft BPM6, which will be published in 2008
5www.bea.gov
New Definitions
Personal Transfers Personal Remittances Total Remittances Total Remittances and Transfers to NPISHs
- Four definitions benefit policy makers - Clarified definitions facilitate collection
and international comparability
6www.bea.gov
Personal transfers
DefinitionPersonal transfers consist of all current transfers in cash or in kind made or received by resident households to or from other non-resident households
INCLUDES: Transfers irrespective of the source of senders income
EXCLUDES: Funds deposited abroad for ones own account as a financial investment
7www.bea.gov
Personal Remittances
Definition (from the perspective of recipient country)(i) personal transfers receivable(ii) plus compensation of employees (COE) receivable(iii) minus taxes and social contributions payable
(related to compensation of employees)(iv) minus transport and travel expenditures payable
by residents employed by nonresidents (v) plus capital transfers receivable from households.
Essentially household-to-household transfers plus earnings net of expenditures of non-resident workers
Personal remittances - supplementary item in BPM6 Personal transfers, and COE - standard items
8www.bea.gov
Total Remittances
Definition (recipient country)
Total remittances = personal remittances + social benefits
Includes all transfers directly to households from any institutional sector
Supplementary item in BPM6
9www.bea.gov
Total remittances and transfers to NPISHs
Definition (recipient country)Total remittances and transfers to non-profit
institution serving households = total remittances receivable + current transfers receivable by NPISHs + capital transfers receivable by NPISHs
Supplementary item in BPM6
10www.bea.gov
US Compilation of Personal Transfers
Model-based approach # of remitters x per-capita transfer
arrayed by: duration of stay in the United States family status country of origin gender
11www.bea.gov
Outbound Personal Transfers
Four variables Foreign-born population (one year
rule) % of foreign-born population that
remits Income of the foreign-born population % of income remitted
12www.bea.gov
Outbound Personal Transfers
Population and income from U.S. Census Bureau
% of population that remits and % of income remitted based on surveys/studies
Characteristics of foreign-born population Duration of stay in the United States Family type Country of origin Gender
13www.bea.gov
US Compilation of Personal Remittances
# of temporary workers x average income
Mostly seasonal Mexican workers
BEA’s measure of net compensation
14www.bea.gov
Total Remittances
Social Benefits U.S. Government pension payments
estimated using administrative data Private pension payments estimated
using limited partner country data
15www.bea.gov
Total Remittances & Transfers to NPISHs
BEA does not measure transfers receivable by NPISHs; does measure transfers through U.S.-based NPISHs
Estimated by collecting data on voluntary survey of U.S.-based non-profit organizations
16www.bea.gov
Assessment of U.S. Methods
Strengths No downward bias from a reporting threshold Covers all means of transfer
Weaknesses Lack regular, representative, quality
information from household surveys on which to base % of pop that remits and % of income remitted
Not sensitive to changes over time or unusual events.
17www.bea.gov
Special Challenges Faced by the U.S.
Large undocumented foreign-born population
Need updated survey data on the remitting behavior of the foreign-born population
18www.bea.gov
“Translating” new Definitions to Surveys
Use BPM6 definitions of remittances and concept of residency
Measure personal transfers, personal remittances, and total remittances by the receiving country, and the former two in the sending country
For personal remittances, collect net earnings of nonresidents workers rather than the gross flows because the amount workers expect to bring home may be easier to collect
Surveys can be designed to fill gaps in data sources: e.g. collect data sent thru informal channels to supplement data available on transactions thru formal channels
Useful for asking about motive for remitting
19www.bea.gov
Household Surveys: Priorities and Limitations
Priorities Identify the remitting population (sending country) or the
recipient population (recipient country) - easier to establish than the amount remitted
Identify the amount remitted per person/household
Limitations Senders may tend to over-report to reflect their generosity Recipient may underreport because of concerns about tax
on income Recall problem – may not be significant for personal
transfers Expect-to-send problem Should exclude funds deposited abroad for own account
20www.bea.gov
Compilation Guide
Drafted by the Luxembourg Group on Remittances
Discusses various approaches and data sources for compiling remittances
Household surveys will be discussed both as a way of directly measuring remittances and as a way to estimate parameters for models
Guide to be released by the IMF in mid 2008