Remittances and Social Safety Nets During COVID-19: Evidence From Georgia and the Kyrgyz Republic

By Nordine Abidi, Mehdi Akhbari, Bashar Hlayhel, Sahra Sakha

May 5, 2023

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Nordine Abidi, Mehdi Akhbari, Bashar Hlayhel, and Sahra Sakha. Remittances and Social Safety Nets During COVID-19: Evidence From Georgia and the Kyrgyz Republic, (USA: International Monetary Fund, 2023) accessed October 4, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Remittance flows in emerging market and developing economies were surprisingly resilient during the COVID-19 crisis, providing much-needed income support for remittance-receiving households. However, households were impacted differently across income distributions. Using novel high-frequency household panel data for Georgia and the Kyrgyz Republic and a difference-in-differences approach, we find that as household income fell during the pandemic, remittance-receiving households were more affected than non-remittance-receiving households. Importantly, we find that the incomes of poor, remittance-receiving households in the Kyrgyz Republic were more adversely affected than their non-remittance-receiving counterparts. In contrast, in Georgia, affluent remittance-receiving households experienced more significant income declines than poor remittance-receiving households. This heterogeneous impact can largely be explained by variations in the effectiveness of social safety nets in the two countries. Our results have important policy implications. Although remittances remained resilient during the pandemic, they affected households differently. As such, policymakers should prioritize addressing gaps in social safety nets to support the most vulnerable.

Subject: Balance of payments, COVID-19, Expenditure, Health, Income, Income distribution, National accounts, Remittances, Social assistance spending

Keywords: Central Asia, COVID-19, Global, Household income, Households in Georgia, Income, Income distribution, Middle East and Central Asia, North America, Remittance flow, Remittance receiver, Remittance-receiving household, Remittances, Remittance-sending country, Social assistance spending

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/094
Stock No:

WPIEA2023094
ISBN:

9798400240966
ISSN:

1018-5941

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