Measuring remittances: the issue of definitions

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Measuring remittances the issue of definitions

• Hania Zlotnik
• Population Division/DESA
• United Nations

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International definition of migrants

• Source Recommendations on Statistics of
  International Migration Revision 1
• United Nations, 1998
• Provides
• Definition of international migrants to measure
  flows
• Framework for reporting flow statistics
• Guidelines to measure stocks

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Definition of country of usual residence

• The country in which a person lives, that is, the
  country in which he or she has a place to live
  where he or she normally spends the daily period
  of rest.
• Temporary travel abroad for purposes of
  recreation, holiday, visits to friends and
  relatives, business, medical treatment or
  religious pilgrimage does not change a person's
  country of usual residence.

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Definition of international migrants to measure
flows

• Short-term migrant
• A person who moves to a country other than that
  of his or her usual residence for a period of at
  least 3 months but less than a year (12 months)
  except in cases where the movement to that
  country is for purposes of recreation, holiday,
  visits to friends and relatives, business,
  medical treatment or religious pilgrimage.

• Long-term migrant
• A person who moves to a country other than that
  of his or her usual residence for a period of at
  least a year (12 months), so that the country of
  destination effectively becomes his or her new
  country of usual residence.

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Implications of the definition of international
migrant

• No distinction is made between foreigners and
  citizens
• A returning migrant is classified as a long-term
  immigrant
• A key use of data on flows based on the
  definition of long-term migrant is calculation of
  the yearly growth of the population

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Data on migration flows

• It is difficult to obtain reliable information on
  the length of stay of migrants, both
  prospectively and retrospectively
• The flow data available for most countries do not
  conform to the definition of long-term migrant

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International definition of remittances

• Source of international definitions IMF Balance
  of payments manual Fifth edition (1993).
• Remittances appear in the current account of the
  balance of payments which reflects transactions
  in real resources (goods, services and income)

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Entries in the balance of payments related to
migration

• B. Income
• 1. Compensation of employees
• C. Current transfers
• 2.1 Workers remittances
• 2.2 Other transfers

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Definition of residence

• Resident
• Individuals, households, legal and social
  entities such as corporations are resident in
  country A if their centre of economic interest
  is in country A.

• Non-resident
• Individuals, households, legal and social
  entities such as corporations are non-resident
  in country A if their centre of economic
  interest is in country B.

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Residence of migrants

• Resident
• Anyone belonging to a country who is absent from
  that country for less than a year.

• Non-resident
• Anyone belonging to a country who is absent from
  that country for at least a year.

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Compensation of employees

• Wages, salaries and other remuneration, in cash
  or kind, earned by individuals in an economy
  other than the one in which they are resident for
  work performed (and paid by) a resident of that
  economy.
• Resident Non-resident worker

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Country of origin perspective

• The line item compensation of employees
  represents the earnings originating abroad of
  migrant workers who stay abroad for less than a
  year (they are non-residents of the economy of
  destination).

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Workers remittances

• Remittances are one type of current transfers
  between households. They consist of all current
  transfers in cash or kind from non-residents to
  resident households. Usually, they are regular
  transfers between members of the same family in
  different countries, with persons abroad being
  absent for a year or longer.

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Varied practices

• Philippines and Thailand the bulk of the data
  interpreted as remittances is reported as
  compensation of employees (70-85 per cent).
• Bangladesh reports a higher sum as Other
  transfers than as workers remittances.

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Use of balance of payment data

• Researchers usually calculate total remittances
  as the sum of compen-sation of employees,
  workers remittances and migrant transfers.
• The compensation of employees may be an estimate
  based on number of tem-porary migrants abroad and
  average wage. It may not represent ACTUAL
  receipts by country of origin.

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In sum

• The international definitions of remittances and
  long-term migrants are consistent
• Inadequate measurement of both is related to the
  difficulty of determining actual length of stay
• Both disregard differences between citizens and
  foreigners, which are crucial in practice

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Conclusions

• Measures of migrant stock NOT of flows are
  closely related to the measurement of remittances
• The UN Recommendations on Migration Statistics
  suggest that the migrant stock be measured in
  terms of the foreign-born and the foreign
  population