Returned migrants and remittances alleviating poverty: Evidence from Malang, East Java

This paper examines the sustainability of returning international migrants, who remain at home country, moving out from poverty. This study uses cross-sectional primary data as of September and October 2015 on 840 households of the returned migrants which is around 10% of the overall migrant stock in the Malang district, East Java as of 2014/2015; and also 840 current migrants, which is again around 10% of the current migrant stock as a control group. Although we have found that remittances reduce the probability of households living in poverty, this study concludes that returning migrants will not be better off for very long, and will almost certainly return to poverty after some time. The major limitation of this paper is that it focuses only on the financial capital’s contribution to the welfare of the returning migrants, not incorporating also such factors as human capital, business skills, or attitude that migrants get from staying overseas. The study suggests the government should provide guidance to migrant households on how to use their gained income in a more sustainable and productive way, thus making the best of the financial capital available to them.