Global Crisi

Migration patterns in a remittances dependent economy: Evidence from Tajikistan during the global financial crisis

ALEXANDER M. DANZER * OLEKSIY IVASCHENKO **

Abstract Before the global financial crisis, Tajikistan was a major labour exporting and the world’s most remittances-dependent country. Remittances had contributed to a remarkable reduction in poverty. This paper exploits a new panel data set spanning the years 2007 to 2009 in order to investigate the effect of the financial crisis on migration and remittances patterns. Expectedly, the economic recession in the main destination country Russia affected Tajikistan through declining remittances. Owing to low diversification in pre-crisis migration patterns, the dependency on sending migrants to Russia and the migration stock there grew. In combination with increased migration risk this suggests that migrants bear part of the cost of the crisis. Keywords: financial crisis, migration, remittances, risk, Tajikistan

Introduction Before the onset of the global financial crisis in 2008, Tajikistan was the labour exporting country with the highest share of GDP (45 per cent) generated through remittances (Ratha et al., 2008). While remittances contributed to the substantial poverty reduction from 72 per cent in 2003 to 53 per cent in 2007 (World Bank, 2009), the Tajikistani economy and Tajikistani households became highly dependent on external finance. The analysis of the 2007 Tajikistan Living Standards Survey (TLSS) revealed that 23 per cent of households directly depended on remittances. In households with migrants, remittances account for as much as 35 per cent of household consumption—and even more for the households in the lower deciles of the consumption distribution. The Tajikistan migration model is one of predominantly seasonal low-skill migration, with 96 per cent of the migrants heading to Russia, where 55 per cent work in the construction sector, and another 30 per cent in other low-skilled...