Migrant Remittances to Central America and Options for Development

Research Paper — Manuel Orozco

Groupe de travail sur la migration en Amérique du Nord et centrale


Remittances are the most visible economic activity among migrants that makes a strong contribution to the development of their home countries. These person-to-person private financial flows, directed to families back home, bring many benefits. Largely because of an obsolete model of economic growth that does not deliver wealth within their societies, people have migrated in order to be able to take care of themselves and their families. Central American migrants have been sending money to their relatives for decades. Further leveraging remittances through financial access, education and investment would strengthen economic development, benefit entire communities, and ultimately reduce the need for Central Americans to migrate.

Migration and Remittances

A 2019 study by Creative Associates found that 25 percent of people from Guatemala, El Salvador, and Honduras have considered emigrating; in 2021, the percentage in El Salvador increased from 24 to 36 percent. Generally, people who have considered migrating reported exposure to tough economic situations and instances of victimization to a greater extent than those who had not considered emigrating. They also have more extensive transnational family ties than those who have not thought about migrating. For those living in this region, individual experiences and specific characteristics are commonly associated with thoughts of migration; these include being young, a low skilled or informal worker, unemployed, a skilled worker with at least a high school education, living in a low-income household, having an unfavorable outlook on their future economic situation, experiencing victimization, and having transnational ties. Notably, youth are twice as likely to consider migrating than their older counterparts. Additionally, a range of economic issues influences whether or not residents from these countries consider migrating. People are 1.24 times more likely to consider migrating if they live in a household earning less than $400 a month and cannot make ends meet. Those that believe conditions are worse off today than the previous year are 1.67 times more likely to think about migrating. Labor market conditions and transnational ties also matter, although merely having a relative abroad does not necessarily make a person more likely to consider migrating. In all three countries, receiving remittances has greater statistical significance than having a relative abroad. However, the statistical interaction1 between receiving remittances and having a relative abroad is significant and yields a 71 percent chance that the person has thought of migrating. Overall, receiving remittances has become an economic source of survival and prosperity.