1 CDRI Research Workshop Tong Kimsun

2 Related Project  Poverty Dynamic Studies (PDS), funded by the World Bank Objective of the project: Identify the transient and chronic poor and determinants of poverty and help design the policies and assess the effectiveness of intervention. Research members: Dr. Hossein, Sovannarith, Vuthy, (Runsinarith) Kimsun, Chhun, Dalis, and Dorina; (Sothea and Neath: Qualitative)

3 Related Project (Cont.) Jalan and Ravallion (2000): Different policies have different implications for each of these two types of poverty.  Longer-term investments in the land and (human and physical) capital of the poor are likely to reduce chronic poverty.  Insurance and income-stabilisation schemes that help protect households against income shocks will clearly be important when poverty is transient, though these policies may also have implications for chronic poverty by lowering the costs of insurance.

4 Related Project (Cont.) In addition to the main objective of the projects, five Sub- Research Policy Topics have been proposed 1. Impact of rising food prices on food security, agricultural production and poverty reduction (Submitted to the World Bank last year and published in ADR ) 2. Micro-financial development, growth and poverty reduction 3. Land ownership, tenure security and productive use of land 4. Improved road access, agricultural production and marketing and income diversification 5. Labour movement/migration, growth and poverty reduction

5 Research Interests Land ownership, tenure security and productive use of land Labour movement/migration, growth and poverty reduction

6 Migration, Remittance and Poverty Reduction  Literature review: Chan and So (1999) assesses the impact of the downturn in the Thai economy (Asia Financial Crisis 1997) on Cambodian migrants seeking work in Thailand. IOM (2006) has overviewed the current labor migration dynamics in Cambodia and introduced new laws, policies and measures which can improve effective labor migration management and the protection of migrant workers.

7 Migration, Remittance and Poverty Reduction Maltoni (2007) reviews internal and external migration in Cambodia. Lim (2007) attempts to highlight migration process, networks, living and working conditions, challenges and difficulties as well as the impact of remittances and migration on sending households and communities. Lim (2007) claims that most households receiving remittance gain net benefits from labour migration, as it helps keep families out of poverty but fails in most cases to move them higher in the well-being ranking.

8 Migration, Remittance and Poverty Reduction Chan (2009a) provides an overview on trends and major issues of labour migration in Cambodia and attempts to assess the financial costs and benefits of cross-border labour migration. Chan (2009a) has simply compared the wealth in terms of income and consumption with and without migrants. He argues that household with migrant workers in 5 villages tend to have lower income and consumption than household without migrant workers. Chan(2009b) reviews labour migration management, policies and legal framework in Cambodia.

9 Migration, Remittance and Poverty Reduction Few studies attempt to estimate the impact of remittances on poverty in Cambodia. However, there are a significant body of literature on the impact of remittances on poverty in other sending countries/regions. For example, Adam (1991), Adams (2004), Adam and Page (2005), Taylor, Mora and Adams (2005), Stark and Taylor (1989), Shroff (2009).

10 Migration, Remittance and Poverty Reduction  A conceptual and empirical framework The optimistic view with respect to remittances and poverty argues that remittances enhance income by shifting people from low-income, low-productivity areas to a higher income area characteristic of an urban or foreign economy. The pessimistic view is that poor households have limited liquidity and are thus unable to have access to migration. In this scenario, remittances and migration will benefit those already in a relatively higher income stratum, doing little to affect absolute poverty in rural areas.

11 Migration, Remittance and Poverty Reduction Compared the interested variables such as income/consumption between household with and without migrants was misleading because of the following problem: ► It is not known what income/consumption of the households would have been if those migrants chosen to stay and work at home.

12 Migration, Remittance and Poverty Reduction To overcome this methodological problem it is necessary to predict the counterfactual situation, namely, what would the incomes of all households have been in the excluding remittances situation if all migrants would have stayed and worked at home. This can be done by predicting (estimating) the per capita household incomes of all households excluding internal or international remittances.

13 Migration, Remittance and Poverty Reduction The results from these predicted income equations can then be used as a basis for evaluating the impact of remittances on poverty when internal and international remittances are included in per capita household incomes.

14 Migration, Remittance and Poverty Reduction  Data CSES 2007 (3593 households)  Model and estimation strategy To predict per capita household expenditures, the following equation was used: where  y i is the per capita expenditure of household i  X i is a vector of household characteristics of household i  is a vector of coefficients, a random disturbance term

15 Migration, Remittance and Poverty Reduction  Empirical result (Excel file...)  Literature review on remittance and poverty reduction (Cambodia)  Drafting the report Thank you for your attention and comments