Final answer:
Remittances are financial transfers that guest workers send back to their home country, often to support their families. These funds are significant sources of income for many countries, such as Mexico, where they are crucial for community livelihoods. The United States is the top country from which remittances are sent, reflecting the global impact of migrant worker economies.
Step-by-step explanation:
The relationship between remittance and guest workers is that remittances are the money that guest workers send back to their home country to support their families or other personal financial commitments. Usually, this involves one person from a family traveling to another country to work and sending a portion of their paycheck back to their place of origin, which is a common situation among Mexican labor migrants in the United States. These remittances are significant sources of foreign income for many countries, such as Mexico, where they are considered the second-largest source of foreign income. Moreover, these financial transfers play a vital role in the livelihood of many communities where without these funds, basic needs might be hard to meet.
According to the World Economic Forum, migrants around the globe sent approximately $800 billion in remittances in 2022, with the United States being the top country from which remittances are sent. The impact of remittances includes advantages such as financial inclusion, family support, economic stimulation, and convenience. However, there are also disadvantages, including high transfer fees, exchange rate fluctuations, the lack of financial education among recipients, and a dependence on these funds.