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Migratory equilibria with invested remittances

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  • Naiditch, Claire

    ()
    (Ecole doctorale d'Economie Panthéon Sorbonne)

  • Vranceanu, Radu

    ()
    (ESSEC Business School)

Abstract

This paper analyzes international migrations when migrants invest part of their income in their origin country. This investment contributes to increase capital intensity and wages in the origin country, thus reducing the scope for migrating. We show that a non-total migratory equilibrium can exist if the foreign wage is not too high, and/or migratory and transfer costs are not too low. Exogenous shocks, such as an increase in the foreign wage, lead to an increase in optimal remittances per migrant, and a higher wage in the origin country. Yet the net effect on the equilibrium number of migrants is positive. Hence, in equilibrium, optimal remittances and number of migrants are positively related. We use data from twenty five countries from Eastern Europe and Central Asia in 2000 in order to test for this implication of our model. OLS and bootstrap estimates put forward a positive elasticity of the number of migrants with respect to remittances per migrant. Policy implications follow.

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Bibliographic Info

Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number DR 09002.

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Length: 46 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:ebg:essewp:dr-09002

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Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
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Web page: http://www.essec.edu/
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Keywords: Investment motive; Migration; Migratory policy; Remittances;

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References

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  1. Jean-Paul Azam & Flore Gubert, 2002. "Those in Kayes. The impact of remittances on their recipients in Africa," Working Papers DT/2002/11, DIAL (Développement, Institutions et Mondialisation).
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  6. Dalen, H.P. van & Groenewold, G. & Fokkema, T., 2005. "Remittances and their effect on emigration intentions in Egypt, Morocco, and Turkey," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3107483, Tilburg University.
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  14. Miguel León-Ledesma & Matloob Piracha, 2001. "International Migration and the Role of Remittances in Eastern Europe," Studies in Economics 0113, Department of Economics, University of Kent.
  15. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September.
  16. Naiditch, Claire & Vranceanu, Radu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Economic Systems, Elsevier, vol. 33(1), pages 60-82, March.
  17. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  18. Dimova, Ralitza & Wolff, François-Charles, 2009. "Remittances and Chain Migration: Longitudinal Evidence from Bosnia and Herzegovina," IZA Discussion Papers 4083, Institute for the Study of Labor (IZA).
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Cited by:
  1. Naiditch, Claire & Vranceanu, Radu, 2010. "Equilibrium migration with invested remittances: The EECA evidence," European Journal of Political Economy, Elsevier, vol. 26(4), pages 454-474, December.

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