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Remittances and Inequality: A Dynamic Migration Model

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Author Info
Docquier, Frédéric () (CADRE, University of Lille 2 and IZA Bonn)
Rapoport, Hillel (CREDPR, Stanford University, CADRE and Bar-Ilan University)

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Abstract

We develop a model of the interdependencies between migration, remittances and inequality, and investigate how migration and subsequent remittances affect inter-household inequality in the origin communities. An important feature of our model is that we take into account the impact of migration on the local (rural) labor market. Migration is shown to decrease wealth inequality but may generate higher income inequality. Moreover, the short-run and long-run impacts of migration on income inequality may also be of opposite signs, suggesting that the dynamic relationship between migration and inequality may well be characterized by an inverse U-shaped pattern. This is consistent with the findings of the empirical literature on remittances and inequality, but offers a different interpretation, with no need to endogenize migration costs through the role of migrant networks.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 808.

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Length: 34 pages
Date of creation: Jun 2003
Date of revision:
Handle: RePEc:iza:izadps:dp808

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Related research
Keywords: migration; remittances; inequality;

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Find related papers by JEL classification:
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
    Other versions:
  2. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July. [Downloadable!] (restricted)
  3. Aghion, Philippe & Bolton, Patrick, 1997. "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, Blackwell Publishing, vol. 64(2), pages 151-72, April. [Downloadable!] (restricted)
  4. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Blackwell Publishing, vol. 60(1), pages 35-52, January. [Downloadable!] (restricted)
  5. Lucas, Robert E B, 1987. "Emigration to South Africa's Mines," American Economic Review, American Economic Association, vol. 77(3), pages 313-30, June. [Downloadable!] (restricted)
  6. Mesnard, Alice & Ravallion, Martin, 2001. "Wealth Distribution and Self-Employment in a Developing Economy," CEPR Discussion Papers 3026, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Bardhan, Pranab & Bowles, Samuel & Gintis, Herbert, 2000. "Wealth inequality, wealth constraints and economic performance," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 10, pages 541-603 Elsevier. [Downloadable!] (restricted)
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  8. Dustmann, Christian & Kirchkamp, Oliver, 2001. "The Optimal Migration Duration and Activity Choice after Re-migration," IZA Discussion Papers 266, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. repec:dia:wpaper:dt200211 is not listed on IDEAS
  10. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April. [Downloadable!] (restricted)
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  11. McKenzie, David & Rapoport, Hillel, 2006. "Can migration reduce educational attainment ? Evidence from Mexico," Policy Research Working Paper Series 3952, The World Bank. [Downloadable!]
  12. Adams, Richard H, Jr, 1989. "Worker Remittances and Inequality in Rural Egypt," Economic Development and Cultural Change, University of Chicago Press, vol. 38(1), pages 45-71, October.
  13. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September. [Downloadable!] (restricted)
  14. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gianmarco León & Valerie Koechlin, 2006. "International Remittances and Income Inequality: An Empirical Investigation," RES Working Papers 4475, Inter-American Development Bank, Research Department. [Downloadable!]
    Other versions:
  2. Zhu, Nong & Luo, Xubei, 2008. "The impact of remittances on rural poverty and inequality in China," Policy Research Working Paper Series 4637, The World Bank. [Downloadable!]
  3. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Sylvain Dessy & Tiana Rambeloma, 2009. "Immigration Policy, Remittances, and Growth in the Migrant-Sending Country," Cahiers de recherche 0915, CIRPEE. [Downloadable!]
  5. Roel Jennissen, 2007. "Causality Chains in the International Migration Systems Approach," Population Research and Policy Review, Springer, vol. 26(4), pages 411-436, August. [Downloadable!] (restricted)
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