Summary 2 - Policy Research Working Paper Determinants of...

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Policy Research Working Paper: Determinants of Remittances: Recent Evidence on Internal in Migrants Vietnam. Authors: Yoko Niimi, Thai Hung Pham, Barry Reilly April 2008 Summary: Naila Prieto Preview: This paper examines remittances based on the behavior from Vietnam’s 2004 Vietnam Migration Survey on internal immigrants. This paper examined the vulnerability of a migrant’s life at the destination and the relationship they have with their relatives at home. And it also examines how the duration of the migration affects remittances. This paper finds that migrants act like risk-averse (option w/ less risk) agents and they send remittances back to their households as an insurance exercise when there’s economic uncertainty. The authors also found that remittances are driven by a migrant’s labor market earnings level. And finally, the role that remittances have on providing risk coping and supporting the family. Introduction: In the past, migration flows ere controlled by migration policies and the household registration system (ho khau). To fix in imbalances in the population density, they encouraged rural to urban and intra-rural migration. In the 1990’s, there was organized internal migration but presently it’s been replaced by the spontaneous migration phenomenon . This shift is a result of the (doi moi) renovation program in three distinct ways: 1. De-collectivization of the agricultural sector rendered farmers less tied to the land. 2. Marketed the economy so people in the urban sector would be less dependent on government subsidies and rationed their income for their daily necessities. 3. Increased flow of foreign direct investment (FDI) attracted migrant workers to certain regions; they were the ones that benefited from this increase. As a result, there’s regional disparities in labor marked earnings, in return provide incentives for internal migrants. (Higher wages in different regions will attract individuals to migrate from low wages to higher wages.) Another reason why there’s been an increase in internal migration is that, the growing youth in Vietnam enjoy freedom and a larger array of economic opportunities than in the past. ( why people migrate). In 1990’s agriculture was central to the labor force. The policy focused on land reform, trade liberalization and promotion of the household sector to produce growth in the agriculture sector and hopefully improve the living standards of rural households. But the agriculture couldn’t absorb the labor force and sustain the poverty reduction. As a result, agriculture employment declined, and by 58% by 2004.
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