Many emigrate from Central American countries, particularly El Salvador, Honduras and Guatemala, to support their families. The money they send back in the form of remittances has become of keystone importance to these Central American economies, resulting in mass migration that breaks families, drives away skilled workers and endangers lives. 

While Central American countries rely on remittances to boost their economies and keep families afloat, this dependency undermines future economic development and comes with a devastating human toll. 

The importance of remittances and why they’re here to stay 

In recent years, the importance and quantity of remittances sent to Central America have continued to increase. In 2024, remittances sent to Nicaragua, El Salvador and Honduras accounted for $45 billion, making up 23% of the region’s total GDP.

Remittances fill the gap of inadequate government-provided welfare and employment programs capable of providing sustainable wages. Remittances also supply what local wages cannot, and are used to afford basic necessities, including food, rent, medicine and school supplies. With an insufficient amount of work and low wages available in Central American countries, people are often forced to leave for places where they can make over three times  the amount they would at home to better provide for their families. 

The human cost of emigration 

The decision to leave home in search of work doesn’t only come with the cost of leaving everything one knows behind, but also puts one’s life in danger. The most common route migrants choose to take while searching for suitable wages is north through Central America, to Mexico, and across the US-Mexico border. 

Three major natural obstacles: the jungle, desert and rivers all contribute to casualties for migrants in unfamiliar environments due to starvation, heat exhaustion and dehydration. Crossing through cartel-dominated areas in Mexico is extremely perilous, and migrants face the constant threat of being abducted, beaten or killed. In total, migrants from Central American countries accounted for almost 500 migrant deaths or disappearances in 2022.

On top of the human cost that often comes with making the journey, many families suffer from the burdens of migration back home. Women left behind often have to work harder to raise their children when their male family members leave. Families become separated and lose contact due to deportations, and children are sometimes left to fend for themselves. 

Many families gather all they have to pay Coyotes to assist in their journey across the border, which can be an insurmountable financial burden for some. Despite all the trouble and danger migration threatens, families take the risk out of necessity. 

A never-ending cycle of dependency 

The more countries continue to depend on remittances, the fewer resources and incentives they have to reform their economy. Qualified laborers, such as engineers, nurses and teachers, are especially likely to leave because of the lack of job opportunities and the opportunity to multiply their wages abroad. This movement of skilled labor creates a “brain drain” that weakens the domestic labor force. 

Although the current extent of the economic damage caused by the absence of skilled labor in Central American countries is unclear, the long-term effects of declining skilled labor bode ominously for these countries’ future economies. 

Young people are more likely to leave, cutting into the next generation of workers needed to grow a weak economy. Brain drain itself can be more harmful than the economic benefits of remittances, leaving little potential for growth in affected countries. 

The cycle of remittance dependency begins when an insufficient number of quality jobs encourages people to leave to support their families. This emigration hinders the absorption of skilled young workers into local labor markets. This labor vacuum discourages investment in new jobs and opportunities, prohibiting sustainable work and further encouraging families to seek international support. The lack of jobs makes emigration all the more necessary, continuing the cycle and intensifying an economy’s reliance on remittances.

Furthermore, inflation caused by remittance-dependent economies can drive up local prices for people left behind without foreign support. People who can’t afford the cost or the sacrifice of migrating are affected by these inflated prices, which cause local wages to become even less valuable. This vicious cycle plagues Central America, making a sustainable shift away from dependency on remittances an increasingly difficult goal to accomplish. 

The US’s role

The United States plays a key part. As the most popular destination for Central American migrants, US  immigration enforcement policies have a large impact on remittance patterns. Remittances from Central Americans grew in 2025 as a result of harsher deportation threats, causing migrants to send more money back home. 

Additionally, proposals to tax remittances in the United States could weaken vulnerable economies and harm families in Central America. The US’s proposed 1% tax on remittances, effective January 1, 2026, would cost Guatemala $200 million. While such a small levy on paper, it will drastically affect families who will have less support than they need to live on.

The movement towards increased enforcement and taxation of remittances would disproportionately harm the most vulnerable and likely fuel even more migration. The United States’ most effective option for mitigating immigration is to invest in the growth of local infrastructure and job markets, thereby decreasing the need to migrate from countries in the first place. As long as local economies remain unstable, people will be forced to leave to support their loved ones back home, despite any attempts to close off borders. 

Looking ahead

Generally, people don’t want to leave home. They are forced to do so out of financial necessity. People who commit to leaving everything behind to embark on a costly and dangerous journey often don’t feel they have any other choice. 

This situation in Central American countries leaves their economies unsustainable and incapable of supporting themselves without remittances. The dependency on emigration benefits no one, and to shift away from it, significant investment in domestic infrastructure is imperative to create lasting jobs.

[Natalie Sorlie edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.