Plate Study

STABLE SHOCK

Remittances across contexts

Among the many corona-induced shocks rippling through the global economy is the crash in remittance payments to developing countries. The World Bank predicts that remittance flows will fall 20% this year—a decline of $100b—largely as a result of shutdowns and wage losses in the global north. The politics of remittances are complex: the scholarly literature both touts the positive development effects of countercyclical cash inflows, and questions the effects of a system that supports consumption at the expense of longer-term economic development.

In a fascinating study on remittances from GCC countries—where migrant workers tend to have few rights while making up a large share of the population—FAISAL Z. AHMED looks at the political effects of remittance economies.

“Using duration models of government turnover for a sample of 97 countries between 1975 and 2004, this article demonstrates that the combination of aid and remittance inflows can empower governments in autocracies to survive longer. The link between the effects of foreign aid and remittances on government survival hinges on the fact that these inflows of money constitute forms of unearned foreign income that a government can potentially exploit for nefarious purposes. This is achieved via two channels. In the first, governments direct some foreign aid to finance patronage goods (income effect). In the second, governments respond to shocks in unearned and largely untaxable household income (i.e., remittances) by diverting expenditures from the provision of welfare goods in favor of patronage goods (substitution effect). My findings suggest that domestic political institutions (and the incentives they generate for governments) mediate the impact of aid and remittance inflows on the quality of governance and the endurance of governments in autocracies.”

Link to the paper.

• A 2019 analysis from the Financial Times provides an excellent overview of remittances to emerging market economies. Link. Part of a FT series on remittances, including case studies on Zimbabwe and Nepal, and reporting on the nations attempts to issue “diaspora bonds” to attract the earnings of expatriate workers. Link to the series.
• A paper by Muhammed Tariq Majeed looks at the effects of remittances on poverty across 65 countries from 1970-2008. Link. Relatedly, a 2015 paper by Phanindra Wunnava et al looks at the impact of financial liberalization on remittances across 84 countries from 1986-2005, and finds mixed results: increased economic freedom in the financial sector has a positive impact, while improved robustness of financial markets has a negative and lagged effect. Link. h/t Alison Oh
• A 2011 paper by Rui Esteves and David Khoudour-Castéras examines remittances and capital flows in the European periphery from 1870-1913. Link.

NEW RESEARCHERS

The social consequences of health insurance

HEEJU SOHN is postdoctoral scholar at UCLA’s Center for Population Research. Her dissertation considers how health policy structures social life by measuring the impact of health insurance access on rates of divorce and mortality.

From the introduction:

“I present a national landscape of health insurance coverage and inequality in the years prior to the Patient Protection and Affordable Care Act of 2010. In chapter 1, I find that women who depend on their husbands for health insurance had the lowest rates of divorce, indicating that family- and employment-based insurance coverage could create inequalities between men and women. In chapter 2, I establish a connection between the availability of public insurance at birth to improvements in later life mortality, underscoring the lasting consequences of medical care during critical periods in the life-course. Chapter 3 examines how gaining and losing health insurance across the life course contributes to racial and ethnic disparities in coverage. African Americans, Hispanics, and Asians have high uninsurance rates mostly due to their greater likelihoods of losing the insurance that they already have, demonstrating the importance of policies that stabilize existing insurance in addition to increasing access.”

Link to the paper, and to Sohn’s website.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

+ + +

• New on the Phenomenal World: Maya Adereth interviews Gøsta Esping-Andersen, whose book The Three Worlds of Welfare Capitalism is foundational for contemporary welfare studies. Link.
• Next Wednesday, please join our staff and fellows for a public webinar discussing the findings of a new report on some potential challenges to a renewable energy transition by JFI researcher Francis Tseng (for a summary of the report, see Francis’ post on Phenomenal World). Link to register for the event.
• “Using administrative data, we find that the share of inequality that is between workplaces is growing in 12 of 14 countries examined, and in no country has it fallen. These results suggest reducing market income inequality requires raising the bargaining power of lower-skilled workers, targeting the increasing market power of firms in concentrated markets, and curbing the ability of powerful firms to outsource low skill employment.” New research by Donald Tomaskovic-Devey et. al. Link.
• On the Economics & Beyond podcast, Dani Rodrik stresses the importance of halting debt payments for developing countries as they cope with the unfolding crisis. Link. And a recent paper by Eric Verhoogen looks at the persisting barriers to industrial upgrading. Link.
• Wei Huang and Chuanchuan Zhang find that China’s New Rural Pension Scheme leads to “higher household income and food expenditure, less farm work, better health, and lower mortality.” Link.
• Mark Blyth and Adam Tooze discuss the structural risks of our financial system and how the current policies of the Federal Reserve serve to preserve and exacerbate them. Link.
• A new PERI report by Robert Pollin, Jeannette Wicks-Lim, and Peter Arno assesses the Medicare Crisis Program proposed by representatives Pramila Jayapal and Joe Kennedy, finding that it would “provide significant support for 95 million people—30% of the U.S. population.” Link. And also from PERI, a policy brief by Gerald Epstein “describes how the Fed’s newly created Municipal Liquidity Facility (MLF) can be used to compensate for the $500 billion hole in state and city public education systems.” Link.
• “This paper examines the ownership structure of eurozone public debt and the distributional consequences thereof. It asks two questions: who holds government debt in Spain, France, Germany, and Italy, and who benefits from the interest received on government debt.” Tobias Arbogast with a fantastic new paper on sovereign debt ownership in the Eurozone. Link.
• Erdem Yörük and Alvaro Comin on contemporary class politics, electoral strategy, and welfare reforms in Turkey and Brazil. Link.
• “The share of workers in frontline industries who are mothers (23.8%) is larger than the share of workers in all industries who are mothers (16.9%).” Hayley Brown, Hye Jin Rho, and Shawn Fremstad look at the share of mothers in frontline industries by compensation and benefits. Link.
• “We develop a multi-period contest model to formulate the role of the power structure of government in the outbreaks and outcomes of coups. In our model, the coup plotter decides whether to carry out a coup against the central government, and the local government chooses whether to confront the military government after a successful coup. More centralized countries constitute an ample prize for the coup plotter since he can enjoy advantages in dealing with the local government. Consequently, military governments are more stable in more decentralized countries. Moreover, the players’ inability to commit imposes an upper-bound on the payo§ to the strong player. And a strong central government has more resources to defend himself. Thus, the relationship between decentralization and coup risk is non-monotonic. This sheds some light on the role of decentralization in political stability.” By Pinghan Liang. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org