Brief review of the relationship among emigration, poverty and overseas workers’ remittances in Colombia

Abstract

Colombia’s economic crisis of the later 1990s and the current armed conflict have increased national poverty. This increase in poverty caused a massive overseas emigration of many Colombian workers. The income remittances sent to Colombia by these workers have become one of the principal items of the current account of the Colombia’s balance of payments. These remittance income are principally used for the living expenditures of Colombian households with members abroad. This paper describes the general causes of the increasing Colombian poverty during the later 1990s and examines the relationship of these causes with the massive overseas emigration of Colombian workers. Further, this paper describes the principal features of overseas remittances sent to Colombia and their impact on poverty reduction. The large percentage of emigrated workers who have high school and tertiary education indicates that they are part of the population allocated in the fourth and fifth income quintiles that migrated because of economic reasons. Then, the overseas remittances keep more Colombians above poverty line by maintaining income levels of the middle class households but do not seem to contribute significantly to the reduction of inequality in Colombia.