Worker Remittances and Growth: The Physical and Human Capital Channels
AbstractRemittances may have an impact on economic growth through channels to physical and human capital. We estimate two variants of an open economy model of these two channels consisting of seven equations using the general method of moments with heteroscedasticity and autocorrelation correction (GMM-HAC) with pooled data for four different samples of countries receiving remittances in 2003. The countries with per capita income below $1200 benefit most from remittances in the long run because they have the largest impact of remittances on savings. Their remittances account for about 2% of the steady-state level of GDP per capita when compared to the counterfactual of having no remittances. Their ratio of the steady-state growth rates with and without remittances is 1.39. Transitional gains are higher than the steady-state gains only for the human capital variables of this sample. As savings react much more strongly than investment an important benefit of remittances is that less debt is incurred and less debt service is paid than without remittances. The elasticity of the GNI/GDP ratio with respect to the remittance/GDP ratio is .002. All effects are much weaker for the richer countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 020.
Date of creation: 2006
Date of revision:
remittances; growth; simultaneous equation model;
Other versions of this item:
- Thomas H.W. Ziesemer, 2009. "Worker Remittances and Growth: The Physical and Human Capital Channels," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 229(6), pages 743-773, December.
- 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, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
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.:
- Giuliano, Paola & Ruiz-Arranz, Marta, 2009.
"Remittances, financial development, and growth,"
Journal of Development Economics,
Elsevier, vol. 90(1), pages 144-152, September.
- Marta Ruiz-Arranz & Paola Giuliano, 2005. "Remittances, Financial Development, and Growth," IMF Working Papers 05/234, International Monetary Fund.
- Giuliano, Paola & Ruiz-Arranz, Marta, 2006. "Remittances, Financial Development, and Growth," IZA Discussion Papers 2160, Institute for the Study of Labor (IZA).
- Loayza, N. & Schmidt, K. & Serven, L., 1999.
"What Drives Private Saving Across the World?,"
47, Cambridge - Risk, Information & Quantity Signals.
- El-Sakka, M. I. T. & McNabb, Robert, 1999. "The Macroeconomic Determinants of Emigrant Remittances," World Development, Elsevier, vol. 27(8), pages 1493-1502, August.
- Verner, Dorte, 2005. "What factors influence world literacy? is Africa different?," Policy Research Working Paper Series 3496, The World Bank.
- Otani, Ichiro & Villanueva, Delano, 1990. "Long-term growth in developing countries and its determinants: An empirical analysis," World Development, Elsevier, vol. 18(6), pages 769-783, June.
- P. K. Bardhan & S. Lewis, 1968.
"Models of Growth with Imported Inputs,"
19, Massachusetts Institute of Technology (MIT), Department of Economics.
- Barro, R. & Mankiw, G., 1992.
"Capital Mobility in Neoclassical Models of Growth,"
Harvard Institute of Economic Research Working Papers
1615, Harvard - Institute of Economic Research.
- Barro, Robert J. & Mankiw, N Gregory & Sala-i-Martin, Xavier, 1994. "Capital Mobility in Neoclassical Models of Growth," CEPR Discussion Papers 1019, C.E.P.R. Discussion Papers.
- Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1992. "Capital Mobility in Neoclassical Models of Growth," NBER Working Papers 4206, National Bureau of Economic Research, Inc.
- Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1994. "Capital mobility in Neoclassical models of growth," Economics Working Papers 82, Department of Economics and Business, Universitat Pompeu Fabra.
- Barro, R.J. & Mankiw, N.G. & Sala-i-Martin, X., 1992. "Capital Mobility in Neoclassical Models of Growth," Papers 655, Yale - Economic Growth Center.
- Dilek Cinar & Frédéric Docquier, 2004. "Brain drain and Remittances: implications for the source country," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(1), pages 103-118.
- Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005.
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677
- Johnson, Paul & Durlauf, Steven N & Temple, Johnathan R. W., 2004. "Growth Econometrics," Vassar College Department of Economics Working Paper Series 61, Vassar College Department of Economics.
- Durlauf,S.N. & Johnson,P.A. & Temple,J.R.W., 2004. "Growth econometrics," Working papers 18, Wisconsin Madison - Social Systems.
- Samir Jahjah & Ralph Chami & Connel Fullenkamp, 2003.
"Are Immigrant Remittance Flows a Source of Capital for Development,"
IMF Working Papers
03/189, International Monetary Fund.
- Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
- World Bank, 2005. "World Development Indicators 2005," World Bank Publications, The World Bank, number 12426, October.
- Mankiw, N Gregory & Romer, David & Weil, David N, 1992.
"A Contribution to the Empirics of Economic Growth,"
The Quarterly Journal of Economics,
MIT Press, vol. 107(2), pages 407-37, May.
- Docquier, Frédéric, 2006. "Brain Drain and Inequality Across Nations," IZA Discussion Papers 2440, Institute for the Study of Labor (IZA).
- Bertoli Simone, 2006. "Remittances and the Dynamics of Human Capitalin the Recipient Country," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200607, University of Turin.
- Richard H. Adams, 2006.
"International Remittances and the Household: Analysis and Review of Global Evidence,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 15(2), pages 396-425, December.
- Adams, Richard H. Jr., 2007. "International remittances and the household : analysis and review of global evidence," Policy Research Working Paper Series 4116, The World Bank.
- Krishna Mazumdar, 2005. "Socio-economic factors determining adult literacy in developing countries," International Journal of Social Economics, Emerald Group Publishing, vol. 32(1/2), pages 98-120, January.
- Carlos Vargas-Silva & Peng Huang, 2005.
"Macroeconomic Determinants of Workers’ Remittances: Host vs. Home Country’s Economic Conditions,"
0507007, EconWPA, revised 29 Jul 2005.
- Carlos Vargas-Silva & Peng Huang, 2006. "Macroeconomic determinantsof workers' remittances: Hostversus home country's economic conditions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(1), pages 81-99.
- Hristos Doucouliagos & Martin Paldam, 2005.
"Aid Effectiveness on Accumulation. A Meta Study,"
Economics Working Papers
2005-12, School of Economics and Management, University of Aarhus.
- Hristos Doucouliagos & Martin Paldam, 2010.
"Conditional aid effectiveness: A meta-study,"
Journal of International Development,
John Wiley & Sons, Ltd., vol. 22(4), pages 391-410.
- Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
- Michael T. Gapen & Thomas F. Cosimano & Ralph Chami, 2006. "Beware of Emigrants Bearing Gifts," IMF Working Papers 06/61, International Monetary Fund.
- Rapoport, Hillel & Docquier, Frédéric, 2005.
"The Economics of Migrants’ Remittances,"
IZA Discussion Papers
1531, Institute for the Study of Labor (IZA).
- Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
- Niimi, Yoko & Ozden, Caglar, 2006. "Migration and remittances : causes and linkages," Policy Research Working Paper Series 4087, The World Bank.
- Schiff, Maurice, 2005.
"Brain Gain: Claims about Its Size and Impact on Welfare and Growth Are Greatly Exaggerated,"
IZA Discussion Papers
1599, Institute for the Study of Labor (IZA).
- Schiff, Maurice, 2005. "Brain gain : claims about its size and impact on welfare and growth are greatly exaggerated," Policy Research Working Paper Series 3708, The World Bank.
- Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
- Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
- Amparo Castello & Rafael Domenech, 2002. "Human Capital Inequality and Economic Growth: Some New Evidence," Economic Journal, Royal Economic Society, vol. 112(478), pages C187-C200, March.
- Orazio P. Attanasio & Lucio Picci & Antonello E. Scorcu, 2000. "Saving, Growth, and Investment: A Macroeconomic Analysis Using a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 182-211, May.
- Marianna Belloc & Giancarlo Gandolfo, 2005. "The Current Account - Interest Rate Relation as a Nonlinear Phenomenon," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(2), pages 145-166.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
- Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
- Ziesemer, Thomas H.W., 2012. "Worker remittances, migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects," Economic Modelling, Elsevier, vol. 29(2), pages 103-118.
- Miguel D. Ramirez & Hari Sharma, 2009.
"Remittances and Growth in Latin America: A Panel Unit Root and Panel Cointegration Analysis,"
Estudios Economicos de Desarrollo Internacional,
Euro-American Association of Economic Development, vol. 9(1).
- Ramirez, Miguel D. & Sharma, Hari, 2008. "Remittances and Growth in Latin America: A Panel Unit Root and Panel Cointegration Analysis," Working Papers 51, Yale University, Department of Economics.
- Ziesemer, Thomas, 2008. "Worker remittances, migration, accumulation and growth in poor developing countries," MERIT Working Papers 063, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
- Sule Akkoyunlu, 2010. "Can trade, aid, foreign direct investments and remittances curb migration from Turkey?," Migration Letters, Transnational Press London, UK, vol. 7(2), pages 144-158, October.
- Hulya Ulku, 2010. "Remitting Behaviour of Turkish Migrants: Evidence from Household Data in Germany," Brooks World Poverty Institute Working Paper Series 11510, BWPI, The University of Manchester.
- Anupam Das & Murshed Chowdhury, 2011. "Remittances and GDP Dynamics in 11 Developing Countries: Evidence from Panel Cointegration and PMG Techniques," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(42), pages 3-23, December.
- Miguel Ramirez, 2013.
"Do Financial and Institutional Variables Enhance the Impact of Remittances on Economic Growth in Latin America and the Caribbean? A Panel Cointegration Analysis,"
International Advances in Economic Research,
Springer, vol. 19(3), pages 273-288, August.
- Miguel Ramirez, 2012. "Do Financial and Institutional Variables Enhance the Impact of Remittances on Economic Growth in Latin America and the Caribbean? A Panel Cointegration Analysis," Working Papers 1202, Trinity College, Department of Economics.
- Hulya Ulku, 2012. "Remitting Behaviour of Turkish Migrants: Evidence from Household Data in Germany," Urban Studies, Urban Studies Journal Limited, vol. 49(14), pages 3139-3158, November.
- Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications, The World Bank, number 13092, October.
- Tausch, Arno & Heshmati, Almas, 2011.
"Migration, Openness and the Global Preconditions of 'Smart Development',"
IZA Discussion Papers
6169, Institute for the Study of Labor (IZA).
- Arno Tausch & Almas Heshmati, 2012. "Migration, Openness and the Global Preconditions of "Smart Development"," Bogazici Journal of Economics and Administrative Sciences, Bogazici University, Department of Economics, vol. 26(2), pages 1-62.
- Carlos Vargas-Silva, 2009.
"Are Remittances Manna From Heaven? A Look at the Business Cycle Properties of Remittances,"
0905, Sam Houston State University, Department of Economics and International Business.
- Vargas-Silva, Carlos, 2008. "Are remittances manna from heaven? A look at the business cycle properties of remittances," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 290-303, December.
- Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn, 2009. "Remittances and economic growth in Latin America and the Caribbean: The Impact of the human capital development," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46751, Southern Agricultural Economics Association.
- Bharati Basu & James T. Bang, 2013. "Insurance and remittances: New evidence from Latin American immigrants to the US," Migration Letters, Transnational Press London, UK, vol. 10(3), pages 383-398, September.
- Arno Tausch & Almas Heshmati, 2013. "Worker remittances and the global preconditions of ‘smart development’," Society and Economy, Akadémiai Kiadó, Hungary, vol. 35(1), pages 25-50, April.
- Jeffrey A. Edwards & Jennis J. Biser, 2011. "The interactive effect of remittances and civil liberties on investment and consumption," International Journal of Development Issues, Emerald Group Publishing, vol. 10(1), pages 20-33, April.
- Kanchan Datta & Bimal Sarkar, 2014. "Relationship between Remittances and Economic Growth in Bangladesh: An Econometric Study," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 19, Bangladesh Development Research Center (BDRC).
- Laurent Gheeraert & Ritha Sukadi Mata & Daniel Traca, 2010. "Remittances and Domestic Investment in Developing Countries: An Analysis of the Role of Financial Sector Development," Working Papers CEB 10-013.RS, ULB -- Universite Libre de Bruxelles.
- Anupam Das, 2012. "Remittance Behavior of Migrants and its Macroeconomic Effects in Four Developing Countries," International Journal of Applied Behavioral Economics (IJABE), IGI Global, vol. 1(1), pages 41-59, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten).
If references are entirely missing, you can add them using this form.