Postal Remittance Services & Regulation As a Policy Tool for Immigration | Will Harmer(1), University of Massachusetts Amherst

Postal Remittance Services & Regulation As a Policy Tool for Immigration | Will Harmer(1), University of Massachusetts Amherst angieliu Sun, 03/31/2024 - 18:05

Abstract

Remittances have grown in recent years to be a major capital flow, with American outflows more than doubling in inflation-adjusted dollars from 1990 to 2009 (CBO 2011, pg. 5). In 2016, they amounted to nearly 140 billion dollars, with even more sent through informal networks which are hard to measure and track (Wormald 2018). Currently, immigrants in America are overcharged by high fees associated with private banking remittance services, facing an average fee of over seven percent (Beaton et al. 2017, pg. 20). The current remittance market offers a variety of policy solutions to immigration policy, two of which are proposed here. The first policy proposed is for the Postal Service to assuage such overcharging by offering low-fee remittance services to documented immigrants. Additionally, placing the transfer of remittances in public hands offers the opportunity of a policy tool for immigration as a whole. The second policy proposed is to create a remittance cap as a percentage of individual immigrant’s income based on local economic factors; the purpose is to regulate remittances to leverage immigration flows to positively affect domestic social welfare.

The topic of immigration has possessed the national mind for years, the economic effects of which have held a foremost position in public anxieties. Yet, one of the most distinctive economic activities of immigrants often goes unmentioned and unconsidered: remittances. Remittances constitute “sending money...[,] making financial investments, or returning to the home country while retaining bank accounts or claims on other financial assets” when in their resident country (CBO 2011, pg. 1) Yet, there is some variety in measures of remittances, such as the World Bank defining remittances largely as the sum of employee’s compensation and personal transfers. Personal transfers comprise of in-kind transfers, while employee’s compensation defines labor income to temporary employees as remittances (“Migration and Remittances Factbook” 2016, pg. xii). The amount sent under the World Bank definition from the United States alone was 138 billion dollars, a large portion of the 581 billion dollars worldwide in 2015 (Wormald 2018). Discussed or not, remittances has swelled to enormous proportions.

The average immigrant sends ten percent of income to their home country (IDB 2006, pg. 4); however, despite the magnitude of the flows there exists no distinct regulatory framework for remittances. This has negative consequences, such as the gouging of immigrants when they send money back to their home country through formal networks. The drive for profit conflicts with immigrants’ interests, and this results in a disadvantageous economic equilibrium with high fees and uncertain services. To bring about a better stasis, the United States should offer low-fee, remittance services to legal immigrants through an institution such as the Postal Service. Thereafter, the federal government can use the new service as a policy tool by regulating the percentage of migrant’s income going to remittance expenditures as a way to incentivize the most socially beneficial immigration while discouraging the most socially costly immigration.

¹Acknowledgements to Professor Hendrik van Den Berg, Professor Carol Heim, and Professor Ina Ganguli of the University of Massachusetts Amherst Economics Department and to Professor Ide O'Carroll of the University of Massachusetts Amherst Sociology Department for editing and feedback on drafts of this article. Their advice was invaluable, and this article would not be possible without them.

Remittance Flows: Trends and History

Remittance Flows: Trends and History angieliu Sun, 03/31/2024 - 18:07

The average immigrant sends around ten percent of their income through remittances, yet the lack of good and consistent data about immigrants’ remittances have often proved to be an impediment for definitive research and results. Both how many individuals remit and how much of their income is devoted to remittances are unsure, with surveys yielding significantly different results. On the higher end, one survey estimates sixty percent of immigrants remit, while on the lower end the National Immigration Survey finds only seventeen percent remit. Based on a data set from 2006, current remittance habits were shown to vary significantly by country of origin. That same data set shows that immigrants only remitted about five percent of their income. The data had a negative skew, with the top quartile of remitters accounting for three-fourth of total remittances from the United States. Creating an accurate picture of the current remittance market is difficult, since many data sources rely on unreliable interviews where a fifth of respondents either don’t know how much is given or refuse to answer outright (Meckel 2008, pg. 2-15). Additionally, informal networks compose a significant amount of global remittance flows, complicating estimates even further (Freund & Spatafora 2008, pg. 357). These confounding factors blur the potential and impact of remittance regulation.

One of the better data sets for remitters in the United States comes from the Census Bureau in 2008, when a supplemental survey on migration and migration-related matters, such as money transfers, was conducted The survey had a similar nonresponse rate to other Census surveys, though the nonresponse rate for the money transfers section was higher for foreignborn households in comparison to native households, possibly skewing the data. Additionally, interviewers reported a great degree of hesitation among respondents, especially as questions continued in the amount and frequency of remittances. They surveyed 458 American households, with 84 percent of those reporting money transfers abroad being foreign-born. More than a quarter of foreign-born households had remitted in the last year, while 54 percent reported remitting 1 to 4 times a year. At the higher end, 30 percent reported remitting over 10 times a year. The average family remitts about 6 to 7 times a year, according to their results. Additionally, 71 percent of foreign-born households reported remitting more than 500 dollars, and 11 percent reported remitting 5 thousand dollars or more. Importantly, it was concluded that only about 12 billion dollars were sent in remittances in 2008, even as other third-party estimates routinely delivered results in the range of 30 to 40 or so billion dollars a year. The Census report continues by calling for greater research into the topic to make stronger conclusions (Grieco et al. 2010). Data sources point in a variety of directions, and their disuniformity underscores the importance of greater research.

The result of an uneven American distribution conforms with other migrant groups behavior as well. For example, among Filipino rural-urban migrants:

…..the percentage of income remitted varies considerably. Among those reporting income on a monthly basis, the percent of income being remitted ranges from less than 1 percent to over 50 percent. Of the total in this group, 39.6 percent remit less than 10 percent of their income; 28.3 percent remit between 10 and 25 percent of their income; 11 percent remit 26-50 percent of income, and 6 percent remit over 50 percent of their income (Trager 1984, pg. 332).

There are notable differences between American international immigrants and Filipino internal migrants. That being said, many of those same immigrants were facing similar social pressures (such as familial obligations, origin-country financial responsibilities, etc), except without such a drastic change in other facets of life (such as culture, wage-level, or distance to their family). In previous studies of remittances, such factors as distance from their home-country and time since migration figure greatly into individuals’ propensity to remit (Perez-Lopez & Diaz-Briquets 1998, pg. 330). This disclarity underscores the need for greater measurement of such a large capital flow, especially one which is so rapidly growing.

Immigrants of differing countries of origin, gender, age, and income all vary in their remitting behavior. One recent study found that the group most likely to remit is “a male immigrant from a rural background who has been in the US for a longer period of time and is from a higher income group (to some extent.)” Further, the most-intensive remitters have a “higher English proficiency, living apart from their family, and from a lower income category and less developed region” (Trombley 2016, pg. 30). Importantly, this profile is the result of a costly and inconsistent formal remittance service market.

The current remittance service market suffers from unaffordability. Fees for such transfers averaging out across platforms at 7.62 percent. They range from as low as 3.45 percent through mobile remittance providers to a high of 11.18 percent through banks (Beaton et al. 2017, pg. 20). These transfers tend to be relatively costless for providers, yet immigrants are losing significant sums. Further, evidence points to a very elastic relationship between formal channels’ transaction costs and remitted income--with a single percentage point increase in fees reducing remittances by 16 percent. Since informal networks often offer lower costs, that may reflect the degree of substitutability between formal and informal remittance flows (Freund & Spatafora 2008, pg. 358-361). The informal market is unreliable as a mode of exchange, not least since transactions don’t have the same level of security as those covered by contracts. These high fees for the formal market drive a greater share of total remittances through informal channels, decreasing the financial security of remitters and their families as well as obscuring the scale of remittances worldwide.

Method of Administration

Method of Administration angieliu Sun, 03/31/2024 - 18:08

The Postal Service may seem like an unlikely agency to conduct such financial dealings as remittances, yet it has both a history of serving immigrants’ financial needs as well as the ability to do so once again. After an act of Congress, the Postal Service offered basic banking services through the Postal Savings System for 55 years. In 1915, immigrants held 70 percent of the bank’s deposits even though they were only 15 percent of the population. Many immigrants distrusted private banking establishments, and felt more comfortable with a public bank. Through an aggressive marketing campaign by the Postal Service to immigrant communities, those communities became natural customers (Baradaran 2014). The issue of affordable financial services is a familiar one for many Americans--more than a quarter of American households were either unbanked or underbanked in 2014, with access to affordable basic financial services beyond reach. As such, this policy change resulted in the proliferation in underserved areas of predatory payday loan lenders. The current arrangement results in nearly 90 billion dollars devoted solely to interest and fees due the usurious interest rates on loans (Office of the Inspector General 2014, pg. 1). Whether such an open and public venture today would yield a similar success story is an open question. After all, the financial sector has grown to be much larger, both in scale and complexity, since the Postal Banking System ended in the 1960s. However, a low-fee remittance service provided through the Postal Service would provide the government corporation a pilot program of sorts, to see how the dynamics of the modern financial system could combine with the structure and nature of the modern Postal Service, as well as the obvious benefit to immigrants of a more consistent and affordable remittance service.

The choice of the Postal Service rather than another government organization also comes down to its equitably-spaced network of infrastructure, allowing immigrants to easily access personnel in order to set up accounts and conduct account maintenance. Investments in new infrastructure would be minimal in comparison to establishing a brand new government corporation or running it through a public institution with a less widespread national presence. With over 31,000 post offices manned by over 500,000 career employees delivering to over 157 million addresses, the Postal Service of today seems capable of replicating the grand accessibility of the past postal banking system. Another possibility of a vehicle for a remittance service may be Immigration and Customs Enforcement, which has the advantage of being situated around immigrant populations. Yet, due to the reputation of the body, many immigrants will shy away from utilizing its service. If there isn’t buy-in, then the program will be hobbled. Regardless of who executes the policy, it must be done hand-in-hand with an extensive, multilingual marketing campaign along the lines of the Postal Service a century ago to build trust among concerned communities.

Further, the Postal Service will be able to provide remittance services less corruptly and criminally than the private sector, while also providing a source of consistency for migrant financial lives. Many banks in recent years have rolled back their remittance services, due to a government crackdown on possible avenues for criminal activity. For that reason, remittance fees have become cheaper and cheaper, yet due to the law enforcement initiatives the trend may reverse (Corkery 2014). In recent years, financial institutions have been cutting ties with money transfer services in an effort to crack down on money laundering and financial crime—a process called de-risking. In 2016 alone, 27 percent of banks worldwide reported closing relationships with remittance providing partners, presenting barriers to free entry in the industry and to the introduction of new innovative advancements (“Migration and Remittances” 2017, pg. 2, 5-6). Remittance service markets are failing—with fault for both public and private sector actors—and immigrant communities are on the hook.

Importantly, these concerns are not merely the machinations of an overzealous national security state, but due to recent bank behavior in regards to international criminal organizations’ financial dealings. This situation occurred in the case of HSBC and its “pervasively polluted” culture which lead to billions of dollars of terrorist and drug trafficker money being transferred through the bank, thus undermining the legitimacy of daily, innocent transactions (Jamieson 2012). It goes without saying that the Postal Service has not been implicated in such wide-ranging scandals as assisting terrorist groups and drug cartels. On the contrary, the worst criminal behavior associated with the Postal Service tends to involve individual workers smuggling drugs or stealing mail, only to be later prosecuted.

The benefits of a postal remittance service do not flow solely to immigrant communities either. The Postal Service’s fiscal health has been significantly hampered since 2006, when Congress imposed uniquely draconian standards for the government corporation to pre-fund it pension obligations (Ritholtz 2018). Even modest profits from a postal remittance system would help bolster its balance-books, and could introduce practices potentially useful in a future postal banking system as some have proposed. Securing safe and transparent transnational flows, saving immigrant’s wallets from private sector gouging, improving a vital institutional force, and providing an opportunity for experimentation in financial markets and transactions are desired and feasible goals for a postal remittance system.

Such a service would allow for a system of remittance regulation for the maximization of immigration’s social good while minimizing its socially disruptive and costly effects. By legislating the work of immigrants’ remittance needs from private banking to the publicly-owned Postal Service, many stakeholders are benefited. Immigrants benefit through the elimination of high fees, while the public sector benefits through the diverted revenue. Further, it produces a transparent, formal market for transactions, rather than a hodge-podge of price-gouging and informality. Through these characteristics, policy-space is created, offering a set of opportunities for improvement and efficiency. Postal remittance legislation is a sound policy offering affordability and security to immigrant communities.

Proposal for a Postal Remittance Regulation System

Proposal for a Postal Remittance Regulation System angieliu Sun, 03/31/2024 - 18:09

Remittances are counterproductive to the resident country’s economy, which in this case the United States. A class of workers reserving ten percent or more of their income in order to enhance the budget of their non-migrating family, later used to fund firms and increase consumption in the immigrant’s home country rather than in the United States. Income diverted to foreign consumption and foreign investment has its own costs in the form of reduced domestic aggregate demand, minus the receivers’ propensity to import American goods and services. Further, there is evidence to suggest that immigration may lower some Americans’ wage potential, specifically those of high school dropouts, who are some of the more unskilled workers of the American economy who often directly compete with unskilled immigrant labor. Thus, immigration does have some costs for some workers, and these costs are possibly outweighed by the benefits of immigration (innovation for example). Regardless of that calculus, it brings a set of costs nonetheless.

These costs, of either reduced wages or reduced domestic aggregate expenditure are localized to the area of the immigrant’s migratory destination, meaning the costs of immigration are primarily spatially-oriented. For example, an unskilled migrant’s remitting leaves local economies with less demand to be satiated by domestic workers, while potentially undercutting the wages of their similarly skilled counterparts--whether native- or foreign-born. There are other costs as well, like increasing rents; for example, in the period immediately after the Mariel Boatlift during the 1980s, low-quality rentals in minority neighborhoods saw rent increases (Greulich et al. 2004, pg. 151). Alternatively, some of immigration’s benefits are regionalized, such as a surge of immigration helping to compensate for recent population declines in that part of the country. In short, remittance policy can help ameliorate the spatial effects of immigration.

In 2015 the United Nations adopted a series of sustainable development goals, among which was to reduce the fees associated with remittances. They recognize the exorbitantly high fees and the negative effects for the immigrants, their families, and their home countries. By 2030, the UN wishes to see remittance fees reduced to three percent, and all corridors charging over five percent eliminated (Galatsidas 2015). If the United States were to establish this postal-remittance service, it could easily effectuate those goals well ahead of schedule in line with the spirit of American inclusion of immigrant communities. Congress could legislate fee levels to compensate for program-related costs while still ensuring affordability and accessibility to immigrant communities. Importantly, ceteris paribus, establishing this scheme of remittance-regulation designed to lead to cheaper and consistent remittance services cultivates a broader and varied appeal in immigrant communities. That broad appeal increases market size, with a resultant decrease in domestic aggregate demand commensurate to the growth in remittance flows. To combat the economic maleffects, it is proposed that a system of regulation according to local factors is proposed.

Level of Policy Execution

Level of Policy Execution angieliu Sun, 03/31/2024 - 18:10

Additionally, this system of remittance regulation should be established through the federal authority, especially after the landmark 2012 Supreme Court case Arizona v. United States. The court rebuffed the state’s attempt to establish new legislation regarding illegal immigrants, finding the laws in violation of the supremacy clause. The clause empowers the federal authority over state and local ones, and that even “complementary” state legislation encroached on federal immigration powers. Immigration laws are not simply considered an extension of domestic policy, since immigrants come bearing other nation’s citizenship. Thus, immigration laws deal with how the United States treats foreign citizens and entities, not a state function but within federal foreign policy power (Guttentag 2013, pg. 11-18; Arizona v. United States, 2012, 567 U.S. 387). A state or another local entity attempting to enact this policy could face a court challenge in the face of a strong headwind of recent precedent.

As such, a system described would require Congressional legislation directing the Postal Service to create the remittance service with fee levels as detailed in the United Nations sustainable development goals, cost providing. Furthermore, Congress should mandate that all legal immigrants establish an account as part of the immigration process to ensure maximum participation among immigrant communities. Citizens should also have access to these remittance accounts, with no cap for anyone not associated with the immigration system. Complementary legislation could require that all remitting for permanent guest workers, permanent residents, etc must occur through the postal system until naturalization, and possibly continuing the mandate for a period of 5 years like the prohibition of public assistance to recently naturalized immigrants (Singer 2004, pg. 26-27). The goal of ensuring universal buy-in and the minimization of private remittance services is necessary for a successful and effective remittance regulation system. To further ensure immigrant community buy-in, any financial services provided should be held secret and anonymous unless account-holders violate the standards of its use and face additional fees and fines.

Proposed Factors

Proposed Factors angieliu Sun, 03/31/2024 - 18:11

Specifically, I offer a plan to establish an effective system of remittance regulation calibrated on a local level according to three separate factors: the unemployment rate among high school dropouts (for similarly educated immigrants); diversity criterion, with non-white (white) immigrants encouraged to work in white-majority (minority-majority) areas; and local capacity utilization (to be defined later in this article). Potential standards for regions are counties, commuting zones, labor market areas (Tolbert & Sizer 1990 pg. 1-3), or another variant such as mobility zones (Foote et al. pg. 16-23). The idea behind these measures is to create separate and distinct mini-metro areas across the United States in order to sort and categorize local economies more systematically. To consider locally- tuned remittance regulation as through the proposed postal remittance system is then akin to asking what the effects of immigration are to net receiving countries like the United States. Its separate factors then are presented as distinct ways immigration impacts local communities, and further proposes that remittances are important enough to immigrant’s destination decision as to merit consideration. A federally-formulated policy according to such local considerations would yield a more exact and distinctive effect.

Depending upon the status of each of these factors, each region would have a remittance cap placed upon resident immigrants. Nationwide there would be a baseline remittance cap, as well as a maximum remittance cap and a minimum remittance cap (covered later in this article). Such a remittance cap would be a proportion of the migrant’s total income. Each factor will either raise or lower the remittance cap by region. For example, a place facing low rental occupancy may have a higher remittance cap in order to encourage immigrants to move there, even moreso if low-skilled unemployment was relatively low, or if they helped to diversify the local neighborhoods and workplaces.

Wages of Unskilled Labor

Wages of Unskilled Labor angieliu Sun, 03/31/2024 - 18:12

The alleged connection between immigration and native’s wages is much discussed, with research mostly rejecting the idea of large-scale and broad wage-effects. Many studies of its effects on wages usually yield negligible effects, if any, and even in some cases the reverse sign. Yet meta-analysis shows significant effects on low-skilled workers—with those effects most heartily felt by similarly-skilled recent immigrants—which in the United States often mean those without a high school diploma (Longhi et al. 2010, pg. 827-829). George Borjas claims that immigrants, due to their vast numbers, redistribute five-hundred billion dollars every year from the poorest workers in the United States to their employers (Borjas 2016). He also contends that high school dropouts have lost about four and a half percent in earnings due to immigration from 1979 to 1997 (Borjas et al. 1997, pg. 65-66). Evidence from the Norwegian construction sector yields a similar result. Relying upon low- and medium-skilled workers especially, the relationship between immigration share and wages is inverse; foreign- and native-born workers seem to behave as substitutes (Bratsberg et al., pg. 1202). Even if for the average wage-earner in the United States’ immigration has little wage effect, there still seems to be a noteworthy effect on unskilled labor’s wages.

Lower wages for those with less education and fewer skills is not a positive outcome from the perspective of public policy. This aspect of the remittance regulation proposal entails establishing a remittance cap inversely related to a region’s unemployment rate among those without a high school diploma relative to the national unemployment rate for the same group. An area with an overabundance of unskilled labor, as measured through the unemployment of the region relative to the national average, would face lower remittance caps in order to disincentivize new immigrant labor to enter an area already struggling. Collecting unemployment rates for those not holding a high school diploma would have to be done on a regional basis, and then compared with the national average. This factor would only apply to those immigrants who have less than a high school diploma, with all those higher educated exempt--barring a new trend of higher-skill immigrants causing unemployment among their similarly educated peers.

Diversity & Productivity

Diversity & Productivity angieliu Sun, 03/31/2024 - 18:12

Further, it is proposed to set the remittance cap based on diversity considerations. There is a public good gained through more racially and ethnically integrated neighborhoods and towns, especially in the face of the recent rise in racial residential segregation (Frey 2018). For example, segregation is presumably at least partially responsible for differences in education, since schooling in the United States often depends on a local areas’ socioeconomic makeup, with minority populations such as blacks and hispanics with on average lower household wealth than their white counterparts, a trend set to continue (Sherman 2017). Furthermore, America is suffering from a crisis of so-called ‘lost einsteins,’ whereby many children from disadvantaged groups see significantly lower rates of innovative activities (as measured through patent authoring) than otherwise expected. For example, one study notes that “if women, minorities, and children from low- income families were to invent at the same rate as white men from high-income families, the rate of innovation in the economy would quadruple” (Bell et al. 2017, pg. 16). Research increasingly illustrates the lost potential resulting from racial stratification and segregation, costs which can potentially be ameliorated through a more targeted immigration policy.

With demographic trends continuing, the United States will see a lower proportion of the white population than in our recent history. The immigrant population is of differing ethnic and racial stock (Suh 2015), and is one of the factors in the gradually decreasing proportion of the white population. Given the tendency for immigrants to cluster in neighborhoods and specific areas, the risk of increasing segregation is more so heightened. The fear of ethnic enclaves has been a recurring paranoia, with some speculating that the unique factors of American history produced a melting pot of greater assimilatory power to counter the proliferation of enclaves (Borjas 2006, pg. 65-68). Yet these enclaves also provide immigrants a baseline social network and support system. The byproducts include helpful links for employment and housing, and institutional forces like community centers and ethnic churches providing bevies of support (Tsang 2014, pg. 1182-1187). Hopefully by leveraging diversity considerations into the remittance system, more individual migrants will take the step of expanding the spread of foreign-born populations to new places, forming the foundation for the expected future diverse immigrant cohorts. Aside from the phenomenon of ethnic enclaves and their impact on immigrants’ social mobility, there are other compelling reasons to promote the further geographic spread of immigration.

Central to that contention is research concluding that more diverse workplaces tend to be more productive. One study using city-level data found that every standard deviation increase in workplace diversity correlates with a six percent wage increase (with wages being used as a proxy for productivity), even after controlling for a variety of factors advocated generally by skeptical economists (Sparber 2009, pg. 79). A sociological review found that increased diversity in a workforce helps in nearly every area that detractors often point to as the harm of diversity. Even after controlling for a myriad of factors, increased diversity was significantly correlated with increased sales, profitability, market share, and the number of customers (Herring 2009, pg. 218). Furthermore, with the trend of low productivity growth in recent years (Blinder 2015), systematic attempts to further innovate labor force combinations are well justified. A side note: for administrative or bureaucratic purposes, it may be easiest to use a simplified measure of just non-white to white population--rather than breaking it down by black, hispanic, asian, pacific islander, etc--with immigrants categorized according to how they would answer questions on race from the Census Bureau. To limit the negative effects of racial segregation and to maximize the social good of diverse workplaces, a remittance cap could serve to ameliorate a rising problem and contribute to creating more productive and innovative American firms.

Local Resource Utilization

Local Resource Utilization angieliu Sun, 03/31/2024 - 18:13

Immigration’s benefits and costs are also related to the capacity utilization of local economies. This is meant to measure public services utilization, such as high school class size or local hospital usage rates. It should also include other possible measures. There seems to be a connection between a higher immigrant population and higher rental prices, although such relationships are highly complex and require more study” (Saiz 2007, pg. 355). It may be beneficial to create some gauge of existing housing utilization (for example, the proportion of unoccupied housing units as a share of total housing), and increase (decrease) the remittance cap the more unoccupied (occupied) the region is relative to the nation overall. For example, a town where much housing goes unused, a hospital wing has just shut down, or classrooms are going empty, would have a higher remittance cap since it has all these facilities, all these unused resources which an increased population can use. By contrast, a region where essentially no housing units go unused, the local hospital is overburdened by a high patient load, and students are sitting on the floor since there aren’t enough seats faces a differing physical limitation than a depressed region. Their infrastructure will be less equipped to handle the added stress of additional population. without creating greater overextension and harm.

The basic aim would be to avoid potential overcrowding of public facilities and housing while encouraging stories like that of Schenectady, New York, where a mayor in the mid-2000s was able to attract large numbers of Guyanese immigrants to his city and revitalize the municipality’s economy (Kershaw 2002). By including local capacity in the remittance equation, the federal government can utilize external immigration to assuage the social maladies associated with population outflows from a community. Especially in recent years, with the growing trend of internal migration toward the so-called Sun Belt, such an enterprise could yield positive localized results to local economies on the downswing and provide a degree of relief to overheating regions. In essence, remittance regulation can help leverage external migration to outweigh internal migration patterns, providing stability and security.

Determining Remittance Caps

Determining Remittance Caps angieliu Sun, 03/31/2024 - 18:13

The importance of the baseline remittance cap cannot be underestimated. A cap that’s too high will lead to fewer immigrants considering it in their work-life decisions and render any system of regulation ineffective and pointless. Conversely, if the remittance cap is too low, it could lead to significantly reduced capital flows to many underdeveloped countries. As many families use remittance income to afford food, education, housing, or healthcare, any large-scale effort to reduce these flows could have tremendously negative effects on those already struggling around the world. To accurately assess the most humane yet binding baseline remittance cap requires a better understanding of individual American immigrants’ decisions about how much to send in remittances.

Remittance cap minimums and maximums should also be established. If there were areas where immigrants simply weren’t allowed to remit any part of their income, that would be unnecessarily cruel, as well as a major impediment to immigration to that region. It thus undercutting the goal of spreading immigrant populations more equally across the country. Similarly, establishing a remittance maximum is very important, since a high cap will weaken the system in its task of accomplishing its policy goals.

Remittance regulation baselines, maximums, and minimums are all mutable; they can be changed through legislative action, executive adjustment, bureaucratic calculation, or any other method as designated through official policy. But in times of economic recession or depression, in order to revitalize aggregate demand and return the economy to producing at its full capacity, the total allowable amount of remittances should be lowered for a period of time. To take such drastic action, policy deciders would have to weigh the good of the resultant new consumer spending with the rights and needs of immigrants themselves, especially for those who remit. For example, remittances tend to be a more consistent source of external financing for many countries, help smooth aggregate consumption over time, facilitate access to credit, and help those in the underdeveloped world gain access to education by letting them offset any lost labor income with remittance income (Beaton et al. 2017, pg. 28-33). Foreign aid flows are often discussed as an important method of assisting underdeveloped world, yet are dwarfed by remittance flows; for example, Guatemala received about 300 million dollars in foreign aid allotments from the United States (USAID 2018), while also benefiting from over 6.5 billion dollars in remittances, nearly 10 percent of the nation’s GDP (Wormald 2018). There is a greater degree of reliability with a financial flow based on individual, microeconomic decisions rooted in family connections, rather than a financial flow determined through political forces and influences unbound by those social factors. All that said, caution must define remittance regulation given how much is on the line for immigrants and their communities.

Lowering the baseline, the maximum, and the minimum all have separate effects. The lowering of the maximum could have the effect of further increasing immigrants response to remittance caps. For example, immigrants who wish to remit the largest amount of their income would need to become even more attuned to local considerations, and thus even more sharply maximize social good and minimize social ill in a well-constructed system. Not all immigrants aim to remit as much, and so its effects could be relatively paltry. A reduction in the minimum might have little actual effect, since many immigrants living in such low-remit regions may simply not remit any income, or so little that it does not factor into their work-life decisions. Lowering the baseline could have large-scale effects on immigrant work-life decisions, and at least until immigrants responded to such changes, could result in significantly fewer total remittance flows.

Furthermore, such a system could prioritize any factor proposed, such as placing the well-being of unskilled laborers first and using that score of the region to determine a great part of the remittance cap. Alternatively, diversity considerations may also be worthy of the most interest, or local capacity utilization if many localities are facing major internal migrations. As aforementioned, to propose a remittance regulation system is akin to asking what immigration’s impacts and consequences are for the immigrant’s resident country; as such if the phenomenon is shown to have more negative effects (or positive ones for that matter), more factors could included. Such a framework allows for a variety of differing policy priorities, and the addition of other factors would be welcome as long as they assist in the goals of maximizing social good and minimizing social ill.

The Ethics of Remittance Regulation

The Ethics of Remittance Regulation angieliu Sun, 03/31/2024 - 18:14

At the risk of sounding like an alarmist about my own policy proposal, postal-based remittance regulation could have enormously detrimental effects on immigrant and foreign communities if done haphazardly and in an uninformed fashion. The power of politics could intrude even further into the lives of immigrants, with negative consequences for the developing world as well. One could foresee an immigrant in the United States needing to remit large sums of money in order for that person’s mother or father to be able to afford medicine or a life-saving medical procedure. By limiting that immigrant’s remitting ability, the family may suffer tremendous loss and trauma. An essential part of maximizing social benefit is preventing the unnecessary burying of innocent people, whether in the United States or overseas. In all of these discussions, keeping an eye to the humane treatment of immigrants is tantamount to establishing a humane society, and of fulfilling America’s historical promise of being a welcoming homeland for the world’s oppressed.

To create a more humane system, the Postal Service should establish a procedure for the permitting of an unlimited remittance cap for a period of time to individual immigrants so they can assist family overseas in their struggles. If an immigrant needed to remit a larger sum, the Postal Service could establish a system in which they would transfer the funds yet forgo transfers for a certain number of months after. Additionally, if a country such as Mexico or Indonesia were facing a natural disaster, a waiver to all immigrants from those countries could be permitted for a period of several months to partially help with recovery.

Further, it is reasonable to question the merit of regulating remittances on both pragmatic and principled grounds. It could be contended that remittances lack the potential policy prowess as I propose, with neither the necessary consumer base nor an important enough factor for individual immigrants to consider. Yet, if a low-fee and accessible public remittance service were established the market conditions would be drastically different, especially if accompanied by a legal mandate in the immigration system. As discussed previously, remittance incomes are vital for developing economies as well as the workers and families which compose it, including those abroad. Remittances also have an investing angle. Rather than coming purely out of familial altruism, self-interested financial investments are another avenue of remittance income (Meckel 2008, pg. 21-22). Thus, regulation which affects an individual's ability to engage in such an important function would provoke reactions, hopefully in line with combined interests of concerned stakeholders.

Conclusion

Conclusion angieliu Sun, 03/31/2024 - 18:15

Remittances up until this date have been largely neglected within many discussions of immigration policy. Within this paper a sketch of a possible structure which, even if rough, exemplifies the scope of this policy, as well as an interesting path forward for immigration policy. I contend that postal remittance services can improve the well-being of immigrants, their families, their home countries, as well as a domestic institution in the Postal Service. Furthermore, remittance regulation as detailed above offers the possibility of maximizing immigration’s overall effects upon society by correcting its possible negative wage effects, maximizing its potential to diversify workplaces and hence increase productivity growth, fight segregation and racial discrimination, and help struggling towns and cities regain population and a tax base. Immigrants and their families domestic and abroad will benefit from a consistent, accessible, and affordable remittance service stationed as close as the local post office. Although bold or outlandish depending on one’s perspective, the task of public policy is to tackle the public’s problems with every means necessary and proper. If that means rethinking American immigration and remittance policy, so be it.

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