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Immigration Policy, Remittances, and Growth in the Migrant-Sending Country

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Author Info
Sylvain Dessy
Tiana Rambeloma

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Abstract

As evidence accumulates to expose the ineffectiveness of foreign aid, there are increasing calls for rich countries to open up their immigration policies so as to enable migrants' remittances to substitute for foreign aid as a growth-stimulant in poor, migrant-sending countries. In this paper, we use an endogenous growth model to argue that the growth effects of transnational migration and remittances are entirely mediated by the human capital profile of emigrants, as determined by immigration policy at the destination country. Quantitatively, we find that when immigration policy at the destination country provokes a "brain drain", growth is negatively impacted in the sending country despite remittances. The reverse is true when immigration policy targets workers with low levels of human capital.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 0915.

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Date of creation: 2009
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Handle: RePEc:lvl:lacicr:0915

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Related research
Keywords: Remittances; migration; growth; education; general equilibrium; child labor;

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Find related papers by JEL classification:
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
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
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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    Other versions:
  2. Devesh KAPUR, 2004. "Remittances: The New Development Mantra?," G-24 Discussion Papers 29, United Nations Conference on Trade and Development. [Downloadable!]
  3. David de la Croix & Matthias Doepke, 2007. "To Segregate or to Integrate: Education Politics and Democracy," Working Papers 60, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
    Other versions:
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  5. Docquier, Frédéric & Rapoport, Hillel, 2003. "Remittances and Inequality: A Dynamic Migration Model," IZA Discussion Papers 808, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Temple, Jonathan, 1999. "A positive effect of human capital on growth," Economics Letters, Elsevier, vol. 65(1), pages 131-134, October. [Downloadable!] (restricted)
  7. Matthias Doepke & Fabrizio Zilibotti, 2005. "The Macroeconomics of Child Labor Regulation," American Economic Review, American Economic Association, vol. 95(5), pages 1492-1524, December. [Downloadable!]
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  8. Michel Beine & Fréderic Docquier & Hillel Rapoport, 2008. "Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers," Economic Journal, Royal Economic Society, vol. 118(528), pages 631-652, 04. [Downloadable!] (restricted)
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  9. Taylor, J. Edward, 1992. "Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects," Journal of Policy Modeling, Elsevier, vol. 14(2), pages 187-208, April. [Downloadable!] (restricted)
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  11. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March. [Downloadable!] (restricted)
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  12. McCormick, Barry & Wahba, Jackline, 2000. "Overseas Employment and Remittances to a Dual Economy," Economic Journal, Royal Economic Society, vol. 110(463), pages 509-34, April. [Downloadable!] (restricted)
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  16. Stark, Oded & Taylor, J. Edward & Yitzhaki, Shlomo, 1988. "Migration, remittances and inequality : A sensitivity analysis using the extended Gini index," Journal of Development Economics, Elsevier, vol. 28(3), pages 309-322, May. [Downloadable!] (restricted)
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  19. Dessy, Sylvain & Knowles, John, 2008. "Why is child labor illegal?," European Economic Review, Elsevier, vol. 52(7), pages 1275-1311, October. [Downloadable!] (restricted)
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  20. Alan B. Krueger & Mikael Lindahl, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December. [Downloadable!] (restricted)
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  21. Trinh Le & John Gibson & Les Oxley, 2005. "Measures of human capital: A review of the literature," Treasury Working Paper Series 05/10, New Zealand Treasury. [Downloadable!]
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