Remittance Flows, Human Capital Investment, and Poverty Reduction: A Microeconomic Comparison of South Asian Labour Migration and Intra-African Regional Migration

Abstract

This paper examines how remittance flows influence human capital investment and poverty reduction through a microeconomic comparison of South Asian labour migration and intra-African regional migration. Based on public data sources and case-based evidence, it compares two migration patterns: labour migration from South Asia to external labour markets, especially Gulf countries, and regional migration within West Africa. The analysis shows that remittances can improve household welfare through direct income support, consumption smoothing, and reduced vulnerability to shocks. They may also support longer-term poverty reduction when used for education, health care, nutrition, and skills formation. However, the effects of remittances are conditional rather than automatic. In the South Asian case, larger and more regular transfers may support planned human capital investment, but high recruitment costs, migration debt, and contract risks can reduce net benefits. In the African case, smaller and less predictable transfers are often more important for household resilience and short-term risk coping. The paper concludes that the poverty-reducing role of remittances depends on migration costs, income stability, financial access, and intra-household allocation decisions.