In the present political climate, it is difficult not to read Roy Germano’s book as a warning. With the rise in nationalistic rhetoric in some wealthy democracies focused on erecting barriers to migration, Outsourcing Welfare points to the serious harm that building walls may cause to people living in poorer states. Germano posits that individuals’ courageous efforts to emigrate and send money home create a transnational safety net that substitutes for, or complements what remains of, state subsidies and social welfare payments that governments dismantled as a part of market reform (p. 19). This safety net reduces its beneficiaries’ economic grievances and improves their assessments of incumbent governments’ performances. These effects, he argues, reduce the likelihood of political instability and the appeal of leftist populism.
Germano tests his expectations by combining ethnography and survey research conducted in Mexico with an analysis of large public surveys from Africa, the Caribbean, Latin America, and the Middle East. Thus, the book both adds to the growing literature on remittances and individual political preferences and posits a micro-level explanation for the aggregate positive association between remittances and political stability in recipient states. This, combined with its timeliness, magnifies the substantive importance, theoretical implications, and methodological contributions of this work.
The book is organized into seven chapters, with Chapter 1 highlighting how the politics of austerity during the 1990s created the welfare gap that remittances fill. Here, Germano’s primary contribution is conceptual, comparing remittances to social welfare payments. This is a theoretically important distinction, as previous research has binned migrant remittances together with official development assistance and natural resource wealth. While it is true that all three might relieve economic pressure on governments, remittances flow across borders directly to families, helping them meet their consumption needs during economic hard times. Germano is not the first to note remittances’ countercyclical, consumption-smoothing properties. However, he is among the first to make the comparison to social welfare payments so clearly, using both survey and interview data.
Chapters 2 and 3 present the theoretical framework and mechanisms between remittances and political stability. Germano traces the Mexican state’s retrenchment of agricultural subsidies and subsequent dependence on migration as a de facto social policy in rural areas. As NAFTA began and agricultural supports ended, small-plot coffee farmers, pork producers, and other displaced workers sought work in the United States to mitigate their economic pain. Germano’s in-depth interviews convincingly support his argument that remittances fill a welfare gap, reducing both economic grievances and demand for state-provided assistance. Respondents declare that, although their towns certainly suffered, remittances “lift the mood,” helping people to feel less uncertain and anxious (p. 56). Further, community members benefiting from remittances describe their towns as “very laid back,” and less concerned with what the state does or does not do (p. 57). Why worry about approaching the government for relief when a text message to a relative working in the United States will provide a quick and effective solution? Germano then poignantly presents his counterfactual, comparing his study areas to similar regions in the South where geographic distance made migration to the U.S. costlier. There, decidedly more anxious farmers formed the Zapatista movement and declared war on the Mexican state.
Original survey data analyzed in Chapter 3 further support the author’s expectations; however, the quantitative evidence appears less impressive. Germano usefully leverages his survey to construct a richer measure of remittances’ household significance. His remittance index improves upon standard measures of household significance by differentiating low-income households that receive consistent remittance sums over long periods of time from middle-income households that receive the same amount, but unpredictably and infrequently (pp.163–64). Unfortunately, some shortcomings arise in the analysis. Outsourcing Welfare lacks much in the way of descriptive statistics. This leaves readers to interpret the width of 90% confidence intervals in order to get a sense of variation on remittance variables. With respect to the remittance index, Appendix II notes that only 262 of the 767 total households reported receiving remittances. Readers observe that the variable is statistically significant in all models, but it is difficult to identify the threshold at which remittance recipients become significantly different from nonrecipients, specifically with respect to their likelihood of reporting stable income (p. 63) and positive sociotropic assessments (p. 67). It also seems that very few respondents report high and very high values, making it hard to know how many respondents fall beyond that threshold.
Selection effects present another potential issue, though more so in later chapters. Germano acknowledges this in his conclusions, but ultimately does not analyze the data in a way to account for them (p. 149). Perhaps future work can utilize matching and other causal inference techniques to assess this possibility. All things considered, there is convincing evidence that households with significant, reliable, and enduring remittance inflows are less economically aggrieved and less likely to engage government services.
In Chapters 4 and 5, Germano tests his expectations beyond the Mexican case by using 120,000 individual observations complied from the Afrobarometer, Arab Barometer, and LAPOP (Latin American Public Opinion Project) surveys. The chapters provide good reviews of trends in migration and remittance flows and interesting cross-national comparisons. As in Mexico, remittance recipients are less likely to report strong economic grievances and criticize the government. However, the author finds that remittance-receiving respondents living in autocratic states appear less likely to support incumbent governments. This resonates well with recent work demonstrating that remittances increase resources available to political opponents and protest in opposition areas (see Abel Escriba-Folch, Covadonga Meseguer, and Joseph Wright, “Remittances and Protests in Dictatorships,” American Journal of Political Science, 62[4], 2018). It also suggests that the argument’s scope may be limited to democracies.
Chapter 6 returns to the Mexican case, exploring whether remittances may have contributed to the narrow electoral defeat of Andres Manuel Lopez Obrador, a populist candidate of the Left, in 2006. Germano’s analysis of the 2006 Mexican Panel Study suggests that they did, preventing a “left turn” by increasing recipients’ likelihood of voting for the National Action Party candidate, Felipe Calderon. Clearly, Lopez Obrador’s 2018 electoral victory suggests limits on remittances’ role in voters’ minds. Yet in closely contested elections, this advantage for incumbents can be quite consequential. In sum, Germano ably supports his claims concerning remittances’ effect on support for incumbent parties, although the chapter does leave questions concerning the risk of political and civil unrest unexplored.
In total, Outsourcing Welfare makes significant theoretical and empirical contributions to our understanding of how remittances influence individual political behavior. The combination of detailed ethnographic evidence and survey data analysis clearly shows that remittances play an important social welfare role by reducing economic anxieties and increasing support for incumbent governments. The result is a book with broad appeal to students and scholars of political behavior, political stability, and economic development.
