Cambridge A Level Economics 9708 — 2025 Oct/Nov Paper 4 · Variant 1

1 Working overseas Many low-income countries have large proportions of the population below the World Bank’s absolute poverty level of $2.15 per day (United States dollars, 2022). One way in which these countries try to reduce their poverty is by the migration of workers to richer countries. The migrants send a portion of their incomes, known as remittances, back home to support their families. These overseas workers are a link between migration and development. The flow of remittance money is greater than the foreign direct investment and official development aid received by middle-income and low-income countries. Total remittances received by those countries in 2022 was $650 billion, of which 45% ($293 billion) was received by only five countries. About 50% of migrants from low-income countries went to high-income countries. Migrants can find their incomes increase significantly. A nurse may make seven times more in Australia than in the Philippines, adjusted for purchasing power parity (PPP). Unlike official aid, remittances flow directly to their receivers and are a stable source of income. They can buy extra food and they may provide savings for the receiver. They may reduce child labour in disadvantaged families and allow for higher spending on education through higher enrolments and more years of completed schooling. Migration can reduce unemployment and raise wages in home countries. Migration may lead to larger benefits for the home country by increasing the rates of return on human capital caused by the creation of better, more productive, and higher paying jobs. When the flow of migrants goes to a host country whose population is ageing, it may reduce the average age of the population. This can lead to an increase in the size of the labour force, reduce the age dependency ratio and make a positive tax contribution. The migrants increase the demand for host country output and may utilise housing in less popular areas. Those with a high level of education make an even more significant contribution to economic output. Sources: The Guardian, 23 August 2023 asia.nikkei.com, 3 March 2023 imf.org, March 2020 (a) Explain what is meant by absolute poverty. [2] (b) Explain, with the aid of a diagram, how the migration of workers from a low-income country is likely to affect wages in the low-income country. [5] (c) The article states: ‘Total remittances received by those countries in 2022 was $650 billion.’ Analyse how this is likely to benefit the migrants’ home economies. [6] (d) Consider if the article contains sufficient information to support the view that migrants have only a beneficial economic impact on the host country. [7]

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