“Dollars wrapped with love.” That’s how Dilip Ratha describes remittances—the money immigrants send home to their families and friends. “There are millions of people who migrate each year. With the help of the family, they cross oceans, they cross deserts, they cross rivers, they cross mountains,” Ratha, an economist, said in a 2014 TED talk. “They risk their lives to realize a dream, and that dream is as simple as having a decent job somewhere so they can send money home and help the family, which has helped them before.”
For a long time, economists tended to overlook these dollars, but recently they’ve come to appreciate their importance. Remittances, which totaled $429 billion in 2016, are worth three times as much as all the foreign aid doled out by governments worldwide, and it’s likely the money is more effective dollar-for-dollar. Unlike aid, which is notorious for passing through corrupt middlemen and inefficient bureaucracies, remittances go directly to recipients, where they pay for schooling, medical expenses, and new fridge-freezers. In some poor countries, like Somalia or Haiti, remittances make up more than a quarter of national income. And statistics show that remittances tend to hold up even in times of crisis. After the financial crash of 2007-2008, the intra-family flows continued even as private capital ground to a halt.