It has been argued that the brain drain’s negative impact may be offset by the higher remittance levels skilled migrants send home. This paper examines whether remittances actually increase with migrants’ education level. The determinants of remittances it considers include migration levels or rates, migrants’ education level, and source countries’ income, financial sector development and expected growth rate. The estimation takes potential endogeneity into account, an issue not considered in the few studies on this topic. Our main finding is that remittances decrease with the share of migrants with tertiary education. This provides an additional reason for which source countries would prefer unskilled to skilled labor migration. Moreover, as predicted by our model, remittances increase with source countries’ level and rate of migration, financial sector development and population, and decrease with these countries’ income and expected growth rate.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
3393.
Find related papers by JEL classification: F22 - International Economics - - International Factor Movements and International Business - - - International Migration F24 - International Economics - - International Factor Movements and International Business - - - Remittances J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
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