Migrants’ remittances—payments sent by foreign-born workers back to their home country—have become a significant source of monetary inflows for many countries. As one of the most important destinations of global migration, the United States is the single largest national source of remittances. The flow of remittances can affect economic growth, labor markets, poverty rates, and future migration rates in the United States as well as in recipient countries.
Migrants remittancespayments sent by foreign-born workers back to their home countryhave become a significant source of monetary inflows for many countries. As one of the most important destinations of global migration, the United States is the single largest national source of remittances. The flow of remittances can affect economic growth, labor markets, poverty rates, and future migration rates in the United States as well as in recipient countries.
Todays publication a collection of tables and figures with descriptive text (shown below)updates and expands upon CBOs May 2005 publication Remittances: International Payments by Migrants. That paper included data through 2003; this document includes data through 2009. The existing data on global remittances are not of very high quality, and the comparisons and trends reported here should be viewed only as approximations.
As detailed in todays publication, the Bureau of Economic Analysis (BEA) estimates that migrants remittances from the United States totaled about $48 billion in 2009nearly 70 percent more than official development assistance provided by the United States government. Nearly $38 billion of that amount was personal transfers by foreign-born residents in the United States to households abroad. The rest, about $11 billion, reflected the compensation of employees who were in the United States for less than a year; some of that compensation, however, was spent in the United States.
According to CBOs analysis of data from the International Monetary Fund, total inflows of remittances globally were about $407 billion in 2008 (in nominal dollars), up from about $150 billion in 2002, an average increase of 18 percent per year. Total inflows of remittances constitute a small fraction of global economic activity, amounting to about 1 percent of gross domestic product (GDP) in 2008. For a number of countries, however, such funds constitute a substantial source of income: For at least six countries in Latin America and the Caribbean, total inflows amounted to more than 10 percent of GDP.
Todays report also shows that there are considerable differences in the amount of remittances transferred from the United States to different regions around the world. BEA provides a regional breakdown for a measure called net private remittances and other transfers, which calculates outflows minus inflows (rather than outflows only) and includes institutional remittances by U.S. nonprofit organizations as well as a variety of other minor transactions. For 2009, BEA reports net private remittances and other transfers from the United States of $82 billion, equal to 0.6 percent of the U.S. GDP in 2009. As show in the figure below, about 40 percent went to other countries in the Western Hemisphere and about 20 percent went to countries in Asia and the Pacific.
CBOs study shows that Mexico is the destination of the largest amount of remittances from the United States. According to BEAs estimates, of the $33 billion (net) transferred from the United States to people in other countries in the Western Hemisphere in 2009 or earned as compensation by short-term migrants, about $20 billion went to Mexico; between 2000 and 2009, such flows from the United States to Mexico (adjusted for inflation) rose by an average of 2 percent per year In surveys of people in the United States who remitted money to Mexico, 70 percent reported that consumption was the only purpose.
This publication is one of a series of updates of earlier CBO immigration studies. All of CBOs immigration publications can be found here. This document was prepared by Jonathan A. Schwabish of CBOs Health and Human Resources Division and Robert Shackleton of CBOs Macroeconomic Analysis Division.