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Remittances and Social Safety Nets During COVID-19: Evidence From Georgia and the Kyrgyz Republic
Author:
Nordine Abidi https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Mehdi Akhbari
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,
Bashar Hlayhel
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Sahra Sakha
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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 094
Language:
English
Publication Date:
05 May 2023
DOI:
https://doi.org/10.5089/9798400240966.001
ISBN:
9798400240966
ISSN:
1018-5941
Pages:
27
Keywords:
COVID-19; Remittances; Central Asia; remittance-receiving household; household income; remittance flow; households in Georgia; remittance-sending country; remittance receiver; Income; Social assistance spending; Income distribution; North America; Middle East and Central Asia; Global
Legal-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.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund