Labour market performance and migration flows - European ...

European CommissionOccasional Paper 60, Volume Iaverage age of return migrants is between 30 and 44 years (Fourati, 2008). Finally, ELMPS (2006)data shows that 35 percent of returnees in Egypt are less than 40 years old, and 35 percent arebetween 40 and 50 years old.8.3 Remittances and consumption patternsAs we argued in section 2.1, the stimulus that migration – via remittances – brings to private demandproduces substantial effects on the labour market only inasmuch as it is directed towards domesticallyproduced goods and services. Regrettably, as Gallina (2006b) observes, there is limited information onthe pattern of remittance used in AMCs countries. Some information – albeit coming from a surveywith a limited coverage – are provided by EIB (2006), which analyzed the distribution of remittancesacross alternative budget items in all AMCs but Palestine. Table 8.1 reports the main findings fromthis survey, which demonstrates that everyday expenses absorb most of the income arising fromremittances, while limited resources are devoted to investments. Schramm (2009) provides evidence –for Tunisia, Morocco and Egypt – that suggests that basic consumption needs (food, heat andclothing), absorb most remittances.DailyexpensesPaymentof schoolfeesTable 8.1. Use of remittances in AMCsBuildinga houseSettingup acompanyInvestmentsOtherNumber ofintervieweesAlgeria 45 13 23 3 5 11 64Egypt 43 12 18 - 15 12 31Jordan 74 16 4 - 6 - 40Lebanon 56 24 5 5 5 5 41Morocco 46 31 16 - 5 2 40Tunisia - 23 34 2 16 25 40Syria 61 11 8 - - 20 49Source: EIB (2006)Still, the argument that most recipient households report that daily consumption needs absorb thegreatest share of their remittance incomes does not suffice to dismiss the concern that remittancesmay fuel the demand for imported products. 109 An interesting – although admittedly extreme – caseis represented by Algeria, where most of the remittances are transferred in kind rather than in cash,as migrants distrust the local financial system. Khachani (2004) argued that the value of goodsimported by Algerian migrants who temporarily returned home on holidays was estimated at $2.5billion per year; needless to say, such a huge amount of resources fails to generate any job-creationeffect, as they cannot be directly used for productive investments, being mostly in the form ofconsumption goods. By the same token, Nassar (2005) argues that Egyptian recipient householdsdevote a sizeable part of remittances to accumulating hoards of valuable items, such as gold andprecious stones, and this dampens the ensuing stimulus on the demand for workers. 110Real estate can also represent a sizeable store of value for recipient households: Fletcher (1999)demonstrates that in Tunisia emigration areas have experienced a remittance-induced sharp raise in109 Note that respondents to these kinds of surveys always report that remittances are earmarked for basic consumptionexpenditures, although this does not suffice to rule out – given the inherent fungibility of incomes – the possibility that theyactually lead to a significant reshaping of expenditure patterns.110 Note that such behaviour can be linked to the temporary character of remittance incomes, and to the probability that sucha flow might come to an unexpected end, because of the major fluctuations in the demand for immigrant workers in the Gulfcountries.140