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Migratory Equilibria with Invested Remittances

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Author Info
Claire Naiditch () (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
Radu Vranceanu () (Department of Economics - ESSEC)

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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 fi ve 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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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00376472_v1.

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Date of creation: Apr 2009
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Handle: RePEc:hal:cesptp:halshs-00376472_v1

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Related research
Keywords: Remittances; Investment motive; Migratory Policy.;

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  1. Stark, Oded & Wang, You Qiang, 2002. "Migration dynamics," Economics Letters, Elsevier, vol. 76(2), pages 159-164, July. [Downloadable!] (restricted)
  2. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
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  3. Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March. [Downloadable!] (restricted)
  4. Gianmarco I.P. Ottaviano & Giovanni Peri, 2006. "Rethinking the Effects of Immigration on Wages," NBER Working Papers 12497, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. McCormick, Barry & Wahba, Jackline, 2004. "Return International Migration and Geographical Inequality: The Case of Egypt," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  6. Claire Naiditch & Radu Vranceanu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00318870_v1, HAL. [Downloadable!]
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  7. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February. [Downloadable!] (restricted)
  8. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January. [Downloadable!] (restricted)
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  9. Ilahi, Nadeem & Jafarey, Saqib, 1999. "Guestworker migration, remittances and the extended family: evidence from Pakistan," Journal of Development Economics, Elsevier, vol. 58(2), pages 485-512, April. [Downloadable!] (restricted)
  10. Stark, Oded & Wang, You Qiang, 2002. "Migration Dynamics," Economics Series 112, Institute for Advanced Studies. [Downloadable!]
  11. 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. [Downloadable!] (restricted)
  12. Riccardo Faini, 2007. "Remittances and the Brain Drain: Do More Skilled Migrants Remit More?," World Bank Economic Review, Oxford University Press, vol. 21(2), pages 177-191, May. [Downloadable!] (restricted)
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