Chapter 1. Integrating migration and development in Costa Rica: Overview and policy recommendations

Costa Rica has recently started seeing the potential of migration for development. However, there are still opportunities being missed to harness the full development potential embodied in its significant rates of emigration and immigration. The Interrelations between Public Policies, Migration and Development (IPPMD) project was conducted in Costa Rica between 2013 and 2017 to explore, through both quantitative and qualitative analysis, the two-way relationship between migration and public policies in five key sectors: the labour market, agriculture, education, investment and financial services, and social protection and health. This chapter provides an overview of the project’s findings for Costa Rica, highlighting the potential for migration in many of its dimensions (emigration, immigration, remittances and return migration) to boost development, and analysing the sectoral policies that will allow this to happen.

  

Costa Rica has a unique position in Central America as both a destination for and origin of migrants. It attracts immigrants from neighbouring countries as well as from the United States, while a significant part of its own population lives abroad.

These migration flows, and the remittances sent home, bring both opportunities and challenges to the country. The key question now is how to create a favourable policy environment across all relevant sectors to enhance the positive, and minimise the negative, impacts of migration.

This report details the Costa Rican findings of a ten-country study on the interrelations between public policies, migration and development (IPPMD; Box 1.1). It aims to provide policy makers with empirical evidence on the role played by migration in policy areas that matter for development. It also explores the influence on migration of public policies not specifically targeted at migration. This chapter provides an overview of the findings and policy recommendations.

Box 1.1. What is the IPPMD project?

In January 2013, the OECD Development Centre launched a project, co-funded by the EU Thematic Programme on Migration and Asylum, on the Interrelations between public policies, migration and development: case studies and policy recommendations (IPPMD). This project – carried out in ten low and middle-income countries between 2013 and 2017 – sought to provide policy makers with evidence of the importance of integrating migration into development strategies and fostering coherence across sectoral policies. A balanced mix of developing countries was chosen to participate in the project: Armenia, Burkina Faso, Cambodia, Costa Rica, Côte d’Ivoire, the Dominican Republic, Georgia, Haiti, Morocco and the Philippines.

While evidence abounds of the impacts – both positive and negative – of migration on development, the reasons why policy makers should integrate migration into development planning still lack empirical foundations. The IPPMD project aimed to fill this knowledge gap by providing reliable evidence not only for the contribution of migration to development, but also for how this contribution can be reinforced through policies in a range of sectors. To do so, the OECD designed a conceptual framework that explores the links between four dimensions of migration (emigration, remittances, return migration and immigration) and five key policy sectors: the labour market, agriculture, education, investment and financial services and social protection and health (Figure 1.1). The conceptual framework also linked these five sectoral policies to a variety of migration outcomes (Table 1.1).

Figure 1.1. Migration and sectoral development policies: A two-way relationship
picture
Table 1.1. Migration dimensions and migration outcomes in the IPPMD study

Migration dimensions

Migration outcomes

Emigration

Emigration happens when people live outside of their countries of origin for at least three consecutive months.a

The decision to emigrate is an important outcome for the countries of origin, not only because it may lead to actual outflows of people in the short term, but also because it may increase the number of emigrants living abroad in the long term.

Remittances

Remittances are international transfers, mostly financial, that emigrants send to those left behind.b

The sending and receiving of remittances includes the amount of remittances received and channels used to transfer money, which in turn affect the ability to make long-term investments.

The use of remittances is often considered as a priority for policy makers, who would like to orientate remittances towards productive investment.

Return migration

Return migration occurs when international migrants decide to go back to and settle in, temporarily or permanently, their countries of origin.

The decision to return is influenced by various factors including personal preferences towards home countries or circumstances in host countries. Return migration, either temporary or permanent, can be beneficial for countries of origin, especially when it involves highly skilled people.

The sustainability of return measures the success of return migration, whether voluntary or forced, for the migrants and their families, but also for the home country.

Immigration

Immigration occurs when individuals born in another country – regardless of their citizenship – stay in a country for at least three months.

The integration of immigrants implies that they have better living conditions and contribute more to the development of their host and, by extension, home countries.

The methodological framework developed by the OECD Development Centre and the data collected by its local research partners together offer an opportunity to fill significant knowledge gaps in the migration and development nexus. Several aspects in particular make the IPPMD approach unique and important for shedding light on how the two-way relationship between migration and public policies affects development:

  • The same survey tools were used in all countries over the same time period (2014-15), allowing for comparisons across countries.

  • The surveys covered a variety of migration dimensions and outcomes (Table 1.1), thus providing a comprehensive overview of the migration cycle.

  • The project examined a wide set of policy programmes across countries covering the five key sectors.

  • Quantitative and qualitative tools were combined to collect a large new body of primary data on the ten partner countries:

    1. A household survey covered on average around 2 000 households in each country, both migrant and non-migrant households. Overall, more than 20 500 households, representing about 100 000 individuals, were interviewed for the project.

    2. A community survey reached a total of 590 local authorities and community leaders in the communities where the household questionnaire was administered.

    3. Qualitative in-depth stakeholder interviews were held with key stakeholders representing national and local authorities, academia, international organisations, civil society and the private sector. In total, 375 interviews were carried out across the ten countries.

  • The data were analysed using both descriptive and regression techniques. The former identifies broad patterns and correlations between key variables concerning migration and public policies, while the latter deepens the empirical understanding of these interrelations by also controlling for other factors.

In October 2016, the OECD Development Centre and European Commission hosted a dialogue in Paris on tapping the benefits of migration for development through more coherent policies. The event served as a platform for policy dialogue between policy makers from partner countries, academic experts, civil society and multilateral organisations. It discussed the findings and concrete policies that can help enhance the contribution of migration to the development of both countries of origin and destination. A cross-country comparative report (OECD, 2017) and the ten country reports will be published in 2017.

a. Due to the lack of data, the role of diasporas – which often make an active contribution to hometown associations or professional or interest networks – is not analysed in this report.

b. Besides financial transfers, remittances also include social remittances – i.e. the ideas, values and social capital transferred by migrants. Even though social remittances represent an important aspect of the migration-development nexus, they go beyond the scope of this project and are therefore not discussed in this report.

Why was Costa Rica included in the IPPMD project?

Costa Rica is a country of significant emigration and immigration flows. While overall it is a net immigration country, it also has one of the highest rates of emigration in the region. Close to 9% of the population were born in another country – the vast majority in Nicaragua – while nearly 3% of Costa Ricans reside abroad (Figure 1.2). The United States is the most common destination (hosing around 65% of Costa Rica’s emigrants), followed by Costa Rica’s neighbouring countries of Nicaragua, Panama and Honduras (UN DESA, 2015; see Chapter 2). The vast majority of immigrants originate Nicaragua: 95% of the female and 97% of male immigrants in the IPPMD dataset were born in Nicaragua (Chapter 3).

Figure 1.2. Costa Rica has the second highest rate of immigrants of all IPPMD countries
Emigrant and immigrant stocks as a percentage of the population, all IPPMD countries (2015)
picture

Note: Data come from national censuses, labour force surveys, and population registers.

Source: UN DESA (2015), International Migration Stock: The 2015 Revision (database), www.un.org/en/development/desa/population/migration/data/estimates2/estimates15.shtml.

Remittances sent home by emigrants constitute an important source of income for many households in Costa Rica. These funds have the potential to improve the well-being of migrant households, and to spur economic and social development. Given that Costa Rica has the lowest share of emigrants in the IPPMD sample, the share of remittances in its gross domestic product (GDP) is relatively modest compared to the other partner countries (just over 1%; Figure 1.3). The volumes and modes of sending remittances depend on multiple factors, including the characteristics of the migrants and the sending and receiving costs.

Figure 1.3. Costa Rica has the lowest level of remittances as share of GDP in the IPPMD sample
Remittances as a share of GDP (%), 2015
picture

Source: World Bank (database), “Annual remittances data (inflows)”, World Bank Migration and Remittance data, www.worldbank.org/en/topic/migrationremittancesdiasporaissues/brief/migration-remittances-data, accessed 22 May 2017.

How did the IPPMD project operate in Costa Rica?

The IPPMD project team worked in Costa Rica with the General Directorate of Migration1 (DGME) of the Ministry of Interior and Police. DGME provided information on country priorities, data and policies and assisted in organising country workshops and bilateral meetings. The IPPMD team also worked with the Central American Centre for Population Studies2 (CCP) at the University of Costa Rica, which helped to ensure the smooth running of the project. CCP helped organise national events, contributed to the design of the research strategy, conducted the fieldwork and co-drafted the country report.

The IPPMD project team organised workshops and meetings in Costa Rica throughout the course of the project. The various stakeholders who participated, and who were interviewed during the missions to San José, also played a role in strengthening the network of project partners and setting the research priorities. A kick-off workshop in San José launched the Costa Rican project in July 2013, with support from the Delegation of the European Union to Costa Rica (see Chapter 3). The workshop served as a platform to discuss the focus of the project with national policy makers and representatives of international organisations, employer and employee organisations, civil society organisations and academics. Following these discussions and in keeping with the overall IPPMD project design, the IPPMD project team decided to focus the analysis on five sectors: 1) the labour market; 2) agriculture; 3) education; 4) investment and financial services; and 5) social protection and health.

Following a training workshop and pilot tests led by the IPPMD project team, CCP collected quantitative data from 2 236 households and 15 communities and conducted 49 qualitative stakeholder interviews (Chapter 3). In September 2015, a consultation meeting was organised in San José to discuss the preliminary findings for Costa Rica with key stakeholders and experts. The project will conclude with a policy dialogue in July 2017 to share the policy recommendations from the findings and discuss with relevant stakeholders concrete actions to make the most of migration in Costa Rica (Figure 1.4).

Figure 1.4. IPPMD project timeline in Costa Rica
picture

What does the report tell us about the links between migration and development?

The findings of this report suggest that the development potential embodied in migration is not being fully exploited in Costa Rica. Taking migration into account in a range of policy areas – not just those directly related to migration – can allow this potential to be better tapped. The report demonstrates the two-way relationship between migration and public policies by analysing how migration affects key sectors – the labour market, agriculture, education, investment and financial services and social protection and health (Chapter 4) – and how migration is influenced by policies in these sectors (Chapter 5). Some of the key findings are highlighted below.

Labour market policies can encourage emigration

How are Costa Rica’s labour market policies affecting migration? It is often assumed that policies such as vocational training programmes will reduce people’s incentives to emigrate by making them more employable. The IPPMD analysis, however, shows that vocational training programmes can also make would-be migrants more employable overseas. Individuals who participated in vocational training programmes are more likely to have plans to emigrate in the future (4%) than those who did not (2%). More in-depth analysis shows that the link between vocational training programmes and plans to emigrate in Costa Rica are particularly likely for women and the urban population.

Migration also has the potential to affect the labour market by contributing to employment and job creation. Return migrants often bring back financial, human and social capital accumulated abroad, which can be used to start or invest in businesses or other types of own-account work, for example. The IPPMD data show that Costa Rican return migrants are more likely to be self-employed than non-migrants (Figure 1.5) – a pattern that was confirmed by regression analysis, particularly for men.

Figure 1.5. Self-employment is higher among individuals in return migrant households
Employment types among employed people, working age population (%)
picture

Note: The difference between households with and without return migrants is statistically significant for men but not for women (using a chi-squared test).

Source: Authors’ own work based on IPPMD data.

Furthermore, the results show that while immigrants contribute low-skilled labour to specific sectors in the Costa Rican labour market, mainly construction and agriculture, they benefit less from labour market policies such as vocational training programmes and government employment agencies than the native-born population. Rectifying this would help them to integrate into the formal labour market.

Immigrant households are less likely to have official titles to their land

In recent decades, the role of agriculture has diminished in Costa Rica. However, diversification, modernisation and export-led development have seen productivity rise in the sector. Migration has the potential to boost this process further by channelling migrant investment towards productive investments in agriculture. Alternatively, investment could be used to diversify farming households’ activities outside the sector. However, the IPPMD findings suggest that return migration and immigration have very little impact on the type of agricultural activities undertaken by agricultural households in Costa Rica. Although return migrants are more likely to invest in businesses outside the agriculture sector, the results show that this is more linked to wealth than to migration per se. Given the small sample of agriculture households in the IPPMD sample it is hard to draw firm conclusions about the link between migration and agriculture, but the findings nevertheless suggest that Costa Rica may be missing an opportunity to harness the social, financial and human capital that return migrants and immigrants can bring.

Costa Rica has a number of agriculture policies in place, including subsidies and agricultural extension programmes. A land titling process in the 1980s defines the legal framework for land ownership, although the exact number of land titles in the country is unknown.

Immigrant workers form an important part of the rural labour force in Costa Rica. The IPPMD study asks to what extent immigrants are able to access agriculture support programmes and titles to their land in Costa Rica. Inability to access these could negatively affect their integration and their economic contribution within and outside the agriculture sector. While its seems that immigrant and non-immigrant households have roughly equal access to agriculture training programmes, immigrant households are less likely to benefit from agricultural subsidies and to hold official titles to their land. Around 25% of immigrant households lack official titles to their land, compared to only 9% of households without immigrants (Figure 1.6). Widening the reach of agricultural programmes and land titling to include immigrants could help boost immigrants’ integration process as well as their agriculture productivity.

Figure 1.6. Households with immigrants are much less likely to have official title to their agricultural land
Share of households benefiting from agricultural policy coverage (%), by immigrant status
picture

Note: A chi-squared test was used to measure the level of statistical significance between each set of groups. Results that are statistically significant are indicated as follows: ***: 99%, **: 95%, *: 90%.

Source: Authors’ own work based on IPPMD data.

Immigrants are less likely to benefit from cash-based education programmes

Costa Rica has been a leading country in the Latin American region in access to primary education, and has the second highest spending on education in the IPPMD sample (OECD, 2017). Part of these investments has been in education programmes, particularly scholarships, to help students with limited resources to pursue education. Through the National Scholarship Fund (FONABE), Costa Rica offers scholarships for education at different levels, including students with special needs and vulnerable groups. Since 2006, the country has also had a conditional cash transfer programme in place to encourage young people from poor backgrounds to stay longer in school.

The Costa Rican legal framework offers primary and secondary education to all children and young people regardless of their migrant status, and immigrants are eligible for scholarships and conditional cash transfers. Education is a fundamental tool for the social integration of immigrant children and young people. However, the results of the IPPMD analysis show that young immigrants (between 15-17 years) are less likely to attend school than their native-born peers. The analysis explored potential contributing factors behind this and found that surveyed immigrant households have less access to cash-based education programmes (Figure 1.7), which may constitute a barrier to immigrant educational attainment and integration. Failure to provide education to immigrant children and children living in immigrant households may negatively affect their integration and future employability, as well as being a lost opportunity for the country when it comes to long-term human capital accumulation.

Figure 1.7. Immigrant households are less likely to benefit from cash-based education policies
Share of households benefiting from education programmes (%), by immigration status
picture

Note: The category “Any education policy” includes all educational programmes included in the survey. The sample includes households with children in school age (6-20 years old). Distribution programmes include distribution of textbooks, uniforms and school meal programmes. Results that are statistically significant are indicated as follows: ***: 99%, **: 95%, *: 90%.

Source: Authors’ own work based on IPPMD data.

Low financial literacy undermines investment

Migration, notably through return migration and remittances, can help households overcome credit constraints and encourage investments in business activities and real estate. However, analysis of the link between migration and productive investment in Costa Rica shows that the impact of migration on productive investment is limited. Emigration does not seem to stimulate business or real-estate ownership, while households with immigrants are less likely to own real estate. There was also no statistically significant link between households with immigrants and owning a business. All in all, the results indicate that the link between migration and investments in productive assets in Costa Rica is relatively weak, but that immigrants are disadvantaged when it comes to real-estate ownership.

While financial training programmes and business management courses help to build financial literacy, and can encourage investment in productive assets, the coverage of such training in Costa Rica is low. Only 5% of households in the sample had participated in a financial training programme in five years prior to the survey (Figure 1.8). In addition, although financial inclusion3 is relatively high in Costa Rica compared to other countries in the IPPMD sample (OECD, 2017), one in four households in rural areas are still unbanked. This might be a missed opportunity to channel remittances into more productive investments. Sectoral policies could help create a more enabling environment, for example by introducing measures to expand financial inclusion and financial literacy training so that migration and remittance funds can be used more efficiently.

Figure 1.8. Household participation in financial training programmes is low
Share of households with bank accounts and share of households participating in financial training programme in past 5 years (%), by geographical location
picture

Note: Results that are statistically significant are indicated as follows: ***: 99%, **: 95%, *: 90%.

Source: Authors’ own work based on IPPMD data.

Immigrants are less covered by social protection and health care

Adequate social protection and health coverage are essential for social cohesion, well-being and productivity. Furthermore, social protection has a fundamental role in the social and economic integration of immigrants. Social protection and health are high on the Costa Rican policy agenda, and the government has acknowledged the importance of immigrants’ social and economic integration by putting in place policies to provide universal healthcare and social protection insurance. There are however still barriers to immigrants’ access to social protection and health services, especially since immigrants tend to be employed in the informal sector.

What does the IPPMD study tell us about the link between migration, social protection and health? The common perception that immigrants tend to be net consumers of health and other welfare system does not seem to hold in Costa Rica. The analysis finds little evidence that immigrants in Costa Rica are net beneficiaries of government transfers or health services. Households with an immigrant tend to benefit much less from government social transfers than households without an immigrant. Immigrants are also less likely to have visited a health facility in the year before the survey took place. Furthermore, immigrants are less likely to have access to employment benefits, such as health and pension benefits (Figure 1.9), largely explained by the fact that immigrants are less likely to have a formal labour contract. Closing the gap between immigrants and native-born individuals in access to formal sector jobs could support immigrant integration and enhance their economic contribution.

Figure 1.9. Immigrants have less access to social protection than native-born individuals in Costa Rica
Share of individuals (%) with access to social protection, by immigrant status
picture

Note: A chi-squared test was used to measure the level of statistical significance between each set of groups, based on all individuals. Results that are statistically significant are indicated as follows: ***: 99%, **: 95%, *: 90%. The sample does not include agricultural workers.

Source: Authors’ own work based on IPPMD data.

A more coherent policy agenda can unlock migration’s development potential

The report suggests that the dimensions of migration analysed in the IPPMD study – emigration, remittances, return migration and immigration – can contribute to economic and social development in Costa Rica. However, this development potential does not yet seem to be fully realised. The current development agenda tends to emphasise the challenges rather than the opportunities of migration. To harness the development impact of migration, the country requires a more coherent policy framework.

The following sections provide policy recommendations for each sector studied in the IPPMD project in Costa Rica. Policy recommendations stemming from the ten-country study across different sectors and the various dimensions of migration are also contained in the IPPMD comparative report (OECD, 2017).

Integrate migration and development into labour market policies

The IPPMD study shows that vocational training programmes in Costa Rica may have indirect and unintentional impacts on migration decisions. The positive link between vocational training programmes and plans to emigrate indicate that these programmes may spur emigration, potentially by making would-be migrants more employable abroad. Furthermore, the results also show that immigrants, while contributing important low-skilled labour, do not benefiting as much from employment agencies or vocational training as their native-born peers. What do these findings suggest for policy?

  • Ensure that vocational training programmes meet domestic labour needs. Mapping labour shortages and strengthening co-ordination mechanisms with the private sector are important steps.

  • Expand the scope of government employment agencies’ activities to reach out to immigrants so that they have a greater chance of finding a formal job. Develop better information systems, through an extended network of employment agencies, to help immigrants and native-born workers alike find jobs that best match their skills.

Leverage migration for agricultural development

The IPPMD analysis shows that return migration and immigration currently have very little impact on farming households’ diversification and investments, either within or outside the agriculture sector. Furthermore, the results show that households with immigrants are less likely to benefit from agricultural subsidies and to hold official titles to their land. Bottlenecks that limit investment in rural areas are a lost opportunity to harness the potential of emigration and immigration for rural development. These findings suggest the following policy recommendations:

  • Facilitate immigrant and return migrant investments in productive agricultural activities by providing households with training in investment and financial skills and by putting in place the infrastructure to make it attractive to invest in rural areas.

  • Ensure that agricultural programmes, such as subsidies and land-titling, are available to immigrants in order to boost productivity in the sector and support immigrants’ integration.

Enhance the links between migration and investment in education

Education is key for immigrant integration. Costa Rica strives to offer education to all children and young people, regardless of their migrant status. However, the results of the IPPMD analysis show that young immigrants are less likely to attend school than their native-born peers. Households with immigrants are also less likely to benefit from cash-based education support programmes, which may constitute a barrier to immigrant educational attainment and integration. The findings suggest the following policy recommendations:

  • Invest in educational infrastructure in areas with high immigration rates to ensure universal access to good quality education and to build social cohesion.

  • Expand cash and in-kind distribution programmes in areas with high immigration rates, and make sure that immigrants have equal access to such programmes.

Strengthen the links between migration, investment, financial services and development

Migration can help increase investments in businesses and entrepreneurship. Simultaneously, a favourable investment climate and an inclusive financial sector can strengthen the development impact of remittances by encouraging more savings and investments. The IPPMD findings show that more can be done to tap into the investment and entrepreneurial opportunities on offer from migration in Costa Rica. Emigration does not currently seem to be linked to business ownership, and immigrant households are less likely to own real estate. In addition, only 5% of households in the sample have participated in a financial training programme in the past five years, and one in four households in rural areas is still unbanked. These suggest that opportunities are being misssed for promoting productive investments from emigration and immigration. The following steps could help to improve this situation:

  • Increase financial literacy and entrepreneurial skills among households in communities with high emigration rates to boost remittance investment.

  • Facilitate business start-ups, for example by providing business management courses and access to credit to encourage migrant investments in new businesses.

Expand the coverage of social protection and health services to improve migration and development

Adequate social protection and health coverage are essential to ensure social cohesion, contribute to well-being and improve integration. Despite the fact that Costa Rica has made social protection and health a priority, there are still barriers to immigrants’ access to social protection and health services. The findings show that households with an immigrant tend to benefit less from government social transfers than households without immigrants. Immigrants are also less likely to have visited a health facility. Furthermore, immigrants are less likely to have access to benefits related to their employment, such as health and pension benefits, which is largely explained by immigrants being less likely to have a formal labour contract. Addressing these inequalities in access to employment in the formal sector is important in order to better integrate immigrants into the labour market and society at large. To achieve this, policy makers can:

  • Increase de jure, but also de facto, universal access to social protection, such as pension plans, medical benefits, labour union membership and formal labour contract provisions, especially in rural areas.

  • Investigate why immigrants use health facilities less frequently, and adjust investments in such facilities in neighbourhoods where there are high levels of immigration, particularly in rural areas.

Roadmap of the report

The next chapter describes the migration landscape for Costa Rica, describing how migration has evolved and reviewing the existing research on the links between migration and development. It also briefly describes the current policy context and institutional frameworks related to migration. Chapter 3 explains the implementation of the fieldwork and the analytical approaches used for the empirical research. It also summarises the broad findings of the IPPMD survey in terms of general emigration, immigration, remittances and return migration patterns. Chapter 4 discusses how the four dimensions of migration affect five key sectors in Costa Rica: the labour market, agriculture, education, investment and financial services, and social protection and health while Chapter 5 explores how the policies in these sectors can influence migration outcomes.

References

OECD (2017), Interrelations between Public Policies, Migration and Development, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264265615-en.

UN DESA (2015), International Migration Stock: The 2015 Revision (database), United Nations Department of Economic and Social Affairs, New York, www.un.org/en/development/desa/population/migration/data/estimates2/estimates15.shtml.

World Bank (2016), “Annual Remittances Data (inflows)”, World Bank Migration and Remittance data (database), World Bank, Washington, DC, www.worldbank.org/en/topic/migrationremittancesdiasporaissues/brief/migration-remittances-data, accessed 22 May 2017.

Notes

← 1. Dirección General de Migración y Extranjería.

← 2. Centro Centroamericano de Población.

← 3. i.e. possessing a bank account.