While much attention has been focused on recent years on measuring the level and effects of international remittances, relatively little attention has been paid to internal remittances (remittances taking place within a country). For example, there are no global estimates on the size of total internal remittances. At the individual country level, there is a dearth of comparative studies on internal and international remittances and so there is much debate about how the effects of internal remittances – on poverty, inequality, gender and social stratification – differ from international remittances.
When compared to international remittances, internal remittances appear to be smaller in size but more prevalent among households. One recent nationally-representative survey in Ghana (Adams, 2007) found that while the average value of internal remittances received by households is only about 30 percent of the value of international remittances, about 5 times as many households receive internal as opposed to international remittances. A smaller household survey in Morocco (de Haas, 2006) also found that the average cash value of internal remittances received was only about 30 percent that of international remittances. In many developing countries internal remittances seem to go mainly to rural households, because they represent the product of rural-to-urban migration, while international remittances go more to urban households.
There is a real need in the literature for more studies examining the differing effects of internal and international remittances on various social and economic factors. Recent studies in Mexico (Taylor et al, 2005) and Nepal (Lokshin et al 2007) suggest that international remittances reduce poverty more than internal remittances. In Mexico, for example, a 10 percent increase in international remittances reduces the rural poverty headcount by 0.8 percent versus 0.4 percent for internal remittances. With regards to the spending behavior of households, a recent study in Ghana (Adams et al, 2008) suggests that households receiving internal and international remittances spend roughly the same at the margin on consumption and investment goods as households with no remittances. In other words, in Ghana there are no changes in marginal spending patterns for households with the receipt of either internal or international remittances.
The literature also needs more studies comparing the determinants of internal versus international remittances. One study in Mali (Gubert, 2002) found that international migrants are more likely to remit, and to remit more money, than internal migrants. This finding parallels similar results in Ghana (Adams, 2007), which found that while 68 percent of international migrants remit, only 49 percent of internal migrants remit. Since international migrants earn 3 to 5 times more than internal migrants, it is likely that the propensity to remit (and the level of remittances) is positively linked with the income levels of migrants.