South-South Migration and Remittances

The impact of South-South migration on the income of migrants and natives is smaller than for South-North migration. However, even small increases in income can have substantial welfare implications for the poor, and cross-migration can improve the match between skills and requirements in the countries involved, thus raising efficiency and welfare. The costs of South-South remittances (where such remittances are permitted) are even higher than those of North-South remittances, because of lack of competition in the remittance market, a lack of financial development in general, and high foreign exchange commissions at both ends of the transaction. These findings suggest that policymakers should pay attention to the complex challenges that developing countries face not only as the countries of origin of migrants, but also as destinations. Designing appropriate policies, however, will require considerable efforts to improve data, and careful analysis of the socioeconomic impact of migration on wages, income distribution, gender, health, and migrants’ rights.