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International Migration and the Role of Remittances in Eastern Europe

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  • Miguel León-Ledesma

    ()

  • Matloob Piracha

    ()

Abstract

Many studies have addressed the effect of migration on both home and host countries, but few have focused on the effect of the economic flows derived from migration, especially for the Central and East European (CEE) countries. In this paper we analyse the effect of remittances on employment performance for CEE economies. To model the macro effects of remittances on the source country we proceed along the lines of Mancellari et al (1996) who extended the model of Aghion and Blanchard (1994) by adding migration. The impact of remittances on unemployment depends on its effect on productivity growth and entrepreneurial investment. In order to empirically analyse the impact of remittances we estimated a productivity equation using a set of 11 transition countries during the 1990-1999 period. We also analyse the impact of remittances on investment and consumption. Our results show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through its effect on investment.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0113.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0113.

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Date of creation: Jun 2001
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Handle: RePEc:ukc:ukcedp:0113

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/

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Keywords: Unemployment; migration; remittances;

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  1. Russell, Sharon Stanton, 1986. "Remittances from international migration: A review in perspective," World Development, Elsevier, vol. 14(6), pages 677-696, June.
  2. 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).
  3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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