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Trade, Aid, Remittances and Migration

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    Abstract

    I investigated whether migration is interrelated with trade, aid and remittances so that any policies that consider trade, aid and remittances also affect the decision to migrate. We developed and estimated an empirical model of Turkish migration to Germany and tested the model for the 1969-2004, using the cointegration technique. A single cointegrating vector is found among the gross migration inflows and the following explanatory variables: the relative income ratio between Germany and Turkey, the unemployment rates in Germany and Turkey, aid, the trade intensity variable and the ratio of manufacturing exports with Germany to total exports with Germany and remittances as a ratio of Turkish GDP. The results of this study show that migration, trade, aid and remittances are interrelated, however, migration will be better managed when the dynamic gains from trade and aid are considered. Hence, the broad-based and rapid economic development with increase in income is the only effective means of reducing migration pressures in a labour-surplus country. This is mainly because the income differential is the most significant factor in determining migration flows.

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    Bibliographic Info

    Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 09-229.

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    Length: 29 pages
    Date of creation: Jun 2009
    Date of revision:
    Handle: RePEc:kof:wpskof:09-229

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    Keywords: Trade; Aid; Remittances; Migration; Cointegration;

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    1. Godfrey, Leslie G, 1978. "Testing for Higher Order Serial Correlation in Regression Equations When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1303-10, November.
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    5. Kevin D. Hoover & Stephen J. Perez, . "Data Mining Reconsidered: Encompassing And The General-To-Specific Approach To Specification Search," Department of Economics 97-27, California Davis - Department of Economics.
    6. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
    7. Dan-Olof Rooth, 2007. "Implicit Discrimination in Hiring – Real World Evidence," CReAM Discussion Paper Series 0705, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    8. Hatton, Timothy J, 1995. "A Model of U.K. Emigration, 1870-1913," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 407-15, August.
    9. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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