Remittances and growing rural inequality

Abdul Bayes | Published: July 15, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

It is a piece of good news that readymade garment (RMG) exports hit record $25 billion in the immediate past fiscal year. This might upset the doomsayers who had forecast almost a forced exit of Bangladesh from the international market following the Rana Plaza devastation. However, competitive prices of Bangladeshi products and a higher demand in foreign countries might have produced the positive result.
If remittances flow too remains stable, then Bangladesh would see a leap forward in economic growth and poverty reduction. In this write-up, based on a survey of 62 villages, we have attempted to examine the demographic characteristics of rural households falling into three groups: a) households which did not have any migrant member, i.e., non-migrant household, b) households with at least one member working overseas and sending remittances (overseas or foreign migrant household), and c) households with members living in cities, towns and other districts (domestic migrant household).
First, household size is found to be the biggest in the case of overseas migrant households compared to domestic and non-migrant households. The average household size of both overseas and domestic migrant households exceeds the national average by a respectable margin although, interestingly, that of the non-migrant households falls short of the national average. The larger household size of foreign and domestic migrantsÂ - compared to non-migrants - could be attributed to two factors.
First, the number of non-relatives staying in these households is higher and second, parents and siblings staying with the household are much higher for overseas migrants compared to domestic and non-migrant households. This also shows that separation of parents with children is more common for non-migrant households than for migrant households.
Second, non-migrant households have relatively more women than domestic or foreign migrant households. For example, for each 100 households with internal and external migrated members, the number of females is respectively 79 and 74. Compared to that, the number is much large in the case of non-migrant households. Relatively large share of women in non-migrant households partly explains the differentials in terms of migration.
Third, child-woman ratio, an indicator of fertility rate, is very high in cases of both foreign and non-migrant households but lower for domestic migrant households. For example, about 60 per cent of women in foreign and non-migrant households had a child over the last five years compared to about 41 per cent in domestic migrant households.
Fourth, labour force participation rate is much higher in case of non-migrant households than for migrant households. The domestic migrant households have the lowest labour force participation rate. The incidence of child worker - a sign of the level of social development - is very high for domestic and non-migrant households (almost same) but it is very low for overseas migrant households.
Finally, the dependency ratio is higher for non-migrant households compared to the migrants.
Housing is an important indicator of socio-economic uplift. The pucca and semi-pucca houses in rural Bangladesh are considered to point to the relatively prosperous position of the household; while kutcha houses reflect a condition of misery.Â We observe that, roughly 70 per cent of the foreign-migrant households have pucca or semi-pucca houses as against one-thirds for domestic migrant and one-fifth for non-migrant households.
We can possibly present the occupational distribution of sample households by looking at the proportion of their working members engaged in different occupations including primary and secondary occupations. Primary occupations are the main source of living or income and labourers also spend most of the time on this. On the other hand, in case primary occupation fails to provide a living, the secondary occupation emerges as a supplementary occupation.
We observe that agriculture (mainly crop production and selling labour in others' lands) is the main occupation of the members of non-migrant households - as both primary and secondary. Interestingly, when the share of agricultural labour used to be low throughout Bangladesh, it has been high for non-migrant households. Again, non-agricultural labour and business appear to be the major non-agricultural activities for these households. The occupational status of the non-migrant households that we notice is quite akin to our earlier observations about who migrate.
To reiterate, the incidence of migration in the case of labour-selling households is generally low and ultimately they cling to the agricultural sector. However, when we consider the occupational status of the migrant households, we observe that more than three-fourths of their labour force is engaged in non-agricultural activities as primary occupation. But, a larger part of labour force of the domestic migrant households is still engaged in agriculture and the trend is rising over time.
Why does this happen? Let us first see the paradox. Despite the required capital from remittances and also relatively higher level of education, we observe not many members of foreign migrant households engaged in businesses, although they are found to be engaged in jobs at large.
There could be three deviations. First, small business and trading require very small amount of capital and low level of education which domestic or non-migrant households can easily seize upon. In fact, these are low productive activities and provide a bare minimum income for a living.
Second, the employment of the labour force from foreign migrant households in high productive jobs - such as in services - indicate their higher social esteem. Â
And finally, in the face of fluctuations in income, more education and efficiency are required for an assured job. Because of socio-economic conditions of domestic migrant and non-migrant households, their members can hardly access those jobs.
We attempted to examine the changes in the components of income across households by looking at sources of income. Comparatively speaking, the per-capita income of foreign migrant household is estimated to be 1.4 times more than that of domestic migrant households and 2.4 times more against non-migrant ones. This is how the per-capita income positively varies with the level of migration.
Again, domestic migrant households have 40 per cent more per capita income than other categories of households that ultimately emerges as a source of income differentials among the households.
Looking at the contribution of remittances to household income, we find that remittances constitute about 45 per cent of the income of foreign migrant households and 13 per cent of the domestic migrant households. Apparently, the magnitude of the difference in household income level and the share of remittances in total household income suggest that remittances in general and foreign remittances in particular, could be one of the main causes of rural inequality of income.
The writer is Professor of Economics at Jahangirnagar University.
Â abdulbayes@yahoo.com