The Economics of Remittances
Over at Marginal Revolution, Tyler Cowen has written a long and worthwhile piece on the economics of remittances. This is must-read stuff for any of us who have been following the recent debates in the press (and on this site) about remittances and development. The comments are already flying over at MR. An excerpt:
Yes, in many regards remittances are more like inflation — albeit in a parallel currency — than like real wealth transfers. But there are also some important efficiency gains.
We also should not assume that distribution and efficiency are fully separate. Perhaps the remittances go to people who know better how to invest the money. Perhaps not.