Although emigration flows from Greece increased threefold between 2009 and 2012, from about 40 000 to more than 120 000 people, remittances evolved in a counterintuitive way. Contrary to theory, remittances to Greece appear not to be countercyclical. Since the country experienced the first effects of the 2008-global financial crisis in 2009, remittances have started to decrease while the main macroeconomic and social indicators of Greece worsened. To understand this phenomenon, I built a statistical model to analyse the impacts of the quality and the level of confidence in the political and institutional systems – that have been strongly affected by the crisis – and the impact of the level of education of new emigrants on remittances inflows. This statistical test has been supplemented by a comparative analysis with other South-European countries that have also been hard-hit by the crisis.
The recent surveys conducted by Gropas and Triandafyllidou (2014) and by Labrianidis and Pratsinakis (2016) provided interesting insights into the factors that pushed Greeks to emigrate and about their sociologic, economic and demographic profile. However, the link between those insights and the remitting behaviour of Greek emigrants has not been clearly established.In my work, I first argue that the diminution of remittances to Greece is positively correlated with the quality and the level of trust in the political and institutional systems. The failure of austerity measures, the sclerotic corruption and clientelism – that act as push factors – along with the very limited inclusiveness of Greek policies towards the diaspora have strongly affected the perceptions and attitudes of Greeks abroad and thus generated a barrier effect. The statistical model evidenced a positive and significant correlation (p=0,01). For a 1-unit decrease in the quality and trust in politics and institutions index (built with various indicators from Eurobarometer, the World Bank’s Governance indicators and Development indicators), remittances sent to Greece per capita decrease by 0.75 units. The context of leaving and the absence of proper diaspora policy creates break in the diasporic link as made concrete by the reduced volume of remittances, return migration or knowledge transfers.
Another factor is the changed profile of emigrants. As evidenced by the above-mentioned studies, the new emigration wave seems to be made of more qualified people than in the past waves. Indeed, it has been emphasized that emigrants from the post-2010 wave are less likely to remit. Less than 20% of them declare that they send remittances whereas more than 65% did before 1969 (Labrianidis and Pratsinakis, 2016). This finding is corroborated by Faini’s work (2007) evidencing that the higher educated the emigrants, the lower the remittances. The two main explanations he gives are convincing and relevant to the Greek case. Firstly, tertiary educated emigrants tend to remit less because they come from a higher socio-economic background, suggesting that their relatives in Greece do not need any financial support. Indeed, the consequent extra-cost of parallel education (frontistiria, idiaitera), necessary to succeed at the Panhellenic examination, as well as the scarcity of public scholarships and student loans, increase the financial burden borne by families (Themelis, 2013). Secondly, highly skilled emigrants tend to stay longer in their destination country, making their link with the homeland weaker (Borjas and Bratsberg, 1996). Thus, there is a selection effect explaining the decrease of remittances inflows in Greece.
In order to highlight the specificity of the Greek case and to test the robustness of the above-mentioned effects, I conducted a comparative analysis with other Southern European countries. The crisis generated an increase of emigration in Greece, Spain, Italy and Portugal, and in all four countries the quality of and trust in the political and institutional systems have been eroded. However, in Greece, remittances have fallen, whereas in Italy and Spain they have increased and in Portugal they have remained stable.
By analysing the annual variation of the quality of and trust in political and institutional systems index, it firstly appears that Greece has been more strongly affected by the crisis. From 2009 to 2012, this index decreased by 8% to 10% yearly, giving evidence of a threshold effect. Thus the remittances became procyclical in Greece partly due to the magnitude of the crisis. Secondly, there is a strong differential among the four countries in terms of diaspora engagement policies. The important work of Lafleur and Stanek (2017) shows that the Italian, Spanish and Portuguese governments conduct many policies aiming at including the diaspora in national affairs. Along with cultural cooperation, incentives to return or remit, or even fiscal incentives, the most symbolic one is the right to vote from abroad, allowed to Italians, Spaniards and Portuguese but not to Greeks. This could be seen as an undermining of the Greek citizenship of Greeks abroad and could impede their remitting behaviour (Leblang, 2007). Thus, there is an inclusion effect: the lower the inclusiveness, the lower the remittances.
There is a lot of further work to be done in order to understand what affects the remitting behaviour of emigrants. The results about Greece open the way for further work at the macro as well as at the micro level. Understanding the determinant of remittances sending could be crucial for governments as they can represent significant inflows not only of foreign revenues, but also of knowledge, ideas and values, crucial to overcoming difficult crisis periods.
References:
Borjas, G. and Bratsberg, B. (1996) ‘Who Leaves? The Outmigration of the Foreign-Born’ The Review of Economics and Statistics (78: 1), pp. 165-176.
Faini, R. (2007) ‘Remittances and the Brain Drain: Do More Skilled Migrants Remit More’ World Bank Economic Review (21: 2), pp. 177-191.
Gropas, R. and Triandafyllidou, A. (2014) ‘“Voting With Their Feet”: Highly Skilled Emigrants From Southern Europe’ American Behavioural Scientist (58: 12), pp. 1614-1633.
Labrianidis, L. and Pratsinakis, M. (2016) ‘Greece’s new Emigration at times of Crisis’ GreeSE Paper No. 99, Hellenic Observatory Papers on Greece and Southern Europe, London School of Economics, [Online] http://eprints.lse.ac.uk/66811/1/GreeSE-No.99.pdf[Accessed: 30 June 2017].
Lafleur, J-M. and Stanek, M. (eds.) (2017) South-North Migration of EU Citizens in Times of Crisis (Springer International Publishing)
Leblang, D. (2017), ‘Harnessing the Diaspora: Dual Citizenship, Migrant Return Remittances’ Comparative Political Studies (50: 1), pp. 75-101.
Themelis, S. (2013) Social Change and Education in Greece, A study in Class Struggle Dynamics, Marxism and Education (United States: Palgrave Macmillan).
Faure, Aymeric (London School of Economics and Political Science)