Building capital : The role of migrant remittances in housing improvement and construction in El Salvador

This study argues and provides evidence that migrant remittances act as a critical form of capital for improving the housing circumstances of the majority of households that receive them in the study locale. Remittances _ the funds sent by labor migrants to their home countries _ have come to light over the past decade as one of the most important capital flows to developing countries, playing as big a role in family budgets as they do in national macroeconomic forecasts. In many contexts throughout the developing world, households use largely autonomous and informal methods to improve their housing, but a lack of capital can inhibit them from fully addressing their housing needs. This study was inspired by the idea that remittances may be providing such capital. To date, little has been written about how migrant remittances are used to build and improve housing. This study examines the role that remittances play in the housing process and its outcomes in a rural area of El Salvador. The main instrument of the research _ an in-depth survey administered to 100 households _ sheds light on what roles remittances play in accessing housing inputs of capital, materials, land, and labor and what impact they have on the housing circumstances of receiving families. The findings tell us that remittances _ a largely informal financial flow _ have been integrated as a vital form of funding into a largely informal context of housing improvements. Remarkably, remittances have not supplanted informal systems of housing production, but have enhanced receiving households' capacity to address their own housing needs, increasing their access to capital, land, labor, and materials. Compared to their non-remittance counterparts, remittance households have been significantly more likely to spend more on improvements, build new houses, utilize paid labor, and buy land for housing. These expenditures have changed the face of housing in the study locale, especially in the case of the new houses that represent over half of housing expenditures. This study concludes that households have extensively used remittances as a capital input to housing. Most poignantly, they have enabled the poorest remittance households to make improvements that have been nearly unattainable for poor non-remittance households. This study affirms the methodological importance of looking at the local context of remittance uses in order to understand how these global flows are utilized and how they benefit remittance households. This local perspective is particularly important when remittances are received in places where informal systems could hide their patterns of use. Furthermore, it gives a glimpse of the role _ both effective and potential _ that these global flows of capital could play in improving housing circumstances in other developing world contexts where migrant remittances intersect with acute housing needs and informal housing strategies.