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Remittance and domestic labor productivity: Evidence from remittance recipient countries

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  • Mamun, Md. Al
  • Sohag, Kazi
  • Uddin, Gazi Salah
  • Shahbaz, Muhammad

Abstract

For countries with significant labor force like China, India, Bangladesh, Pakistan etc. any long-run growth strategy should focus on augmenting the domestic labor productivity. The advents of globalization and factor mobility have given a recipe to reap up gains from labor abundance for most of the labor abundant countries by strategically converting abundant labor into capital. However, remittance inflow may become counterproductive strategy for growth, if it is viewed within the work–leisure framework. Using heterogeneous non-stationary panel data with cross-sectional bias this empirical study explores the best-fitted estimator to explain remittance and labor productivity dynamics for 61 top remittance recipient countries of the world. Our results suggest that though remittance has a positive impact on domestic labor productivity for countries with higher size of remittance inflow and abundant labor force; however, there is new evidence that such impact diminishes after certain level. Moreover, such result does not hold for countries with higher remittance-share of GDP.

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  • Mamun, Md. Al & Sohag, Kazi & Uddin, Gazi Salah & Shahbaz, Muhammad, 2015. "Remittance and domestic labor productivity: Evidence from remittance recipient countries," Economic Modelling, Elsevier, vol. 47(C), pages 207-218.
  • Handle: RePEc:eee:ecmode:v:47:y:2015:i:c:p:207-218
    DOI: 10.1016/j.econmod.2015.02.024
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    Cited by:

    1. Isaac Dadson & Ryuta Ray Kato, 2015. "Remittances and the Brain Drain in Ghana: A Computable General Equilibrium Approach," Working Papers EMS_2015_04, Research Institute, International University of Japan.
    2. Isaac Dadson & Ryuta Ray Kato, 2016. "Remittances and the Redistributive Policy in Ghana: A Computable General Equilibrium Approach," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 28-44, May.
    3. Kakhkharov, Jakhongir & Akimov, Alexandr & Rohde, Nicholas, 2017. "Transaction costs and recorded remittances in the post-Soviet economies: Evidence from a new dataset on bilateral flows," Economic Modelling, Elsevier, vol. 60(C), pages 98-107.
    4. Isaac Dadson & Ryuta Ray Kato, 2015. "Remittances and the Redistributive Tax Policy in Ghana: A Computable General Equilibrium Approach," Working Papers EMS_2015_05, Research Institute, International University of Japan.

    More about this item

    Keywords

    Labor productivity; Foreign remittance; Developing countries; Globalization;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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