El Salvador's Central Bank: Emigration to U.S. Causes Brain-Drain

By Kausha Luna on September 18, 2015

EDITOR’S NOTE: This blog was updated on 10/23/15 to clarify the description of data contained in the BCR report on family remittances.

The United Nations' new sustainable development agenda presents migration and remittances as a contribution to development. However, El Salvador's Central Bank (BCR) says emigration to the U.S. is a cost, not a benefit, for El Salvador.

The president of the bank, Oscar Cabrera, noted the Salvadoran economy is not producing enough jobs to absorb the thousands of youth that enter the labor force each year. Cabrera added, "Remittances received from 1980 to 2012 represent 11 percent of the gross domestic product (GDP), but the cost of this migration is 11.8 percent, so that our society is losing with this outflow of professionals." The bank's president explained the country could not continue with the loss of skilled workers. There is an opportunity cost, he said – the brain drain reduces productivity, it causes a shortage of skilled labor, and hinders innovation.

A report by the BCR on family remittances and a profile of remittance senders shows emigration to the U.S. from El Salvador has resulted in a "brain-drain." According to the report, based on a survey of immigrants in the U.S., 4 out of 10 emigrants were professionals who met the academic requirements for the majority of companies in El Salvador.

The report shows Salvadoran immigrants send 15 percent of their income back to their home country as remittances for their family. Most of these immigrants, while considered professionals in their home country, work in the service industry in the United States. The average male surveyed earns $2,340 per month and women earn about $1,600. The average remittance is about $300. Remittances are sent at an average of 14 times per year. The use of remittances varies. Of the remittances sent on special occasions (which constitute 8.2 percent of remittances) 26 percent are used to pay medical expenses, 23.8 percent to buy homes, and 23.5 percent for celebrations. Only 3.5 percent of these remittances are used to pay university studies, 2.4 percent are used to pay loans, and 1.9 percent invested in family businesses.

Additional findings:

  • Of those polled, 51 percent of immigrants identified "improve quality of life" as their reason for emigrating, 15 percent responded they emigrated due to violence and insecurity.
  • Approximately half of remittance senders in the United States are illegal immigrants.
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Topics: Remittances