IDEAS home Printed from https://ideas.repec.org/a/ris/integr/0452.html
   My bibliography  Save this article

Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica

Author

Listed:
  • Bussolo, Maurizio

    () (The World Bank)

  • Medvedev, Denis

    () (The World Bank)

Abstract

Econometric analysis established a negative relationship between labor supply and remittances in Jamaica. We incorporate this ex-post evidence in a general equilibrium model to investigate economy-wide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica’s export base and small manufacturing importcompeting sector. Within the narrow margins of maneuver of a highly indebted government, we show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially worrisome effects of remittances.

Suggested Citation

  • Bussolo, Maurizio & Medvedev, Denis, 2008. "Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 734-764.
  • Handle: RePEc:ris:integr:0452
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1, January.
    2. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, Oxford University Press, pages 1339-1382.
    3. Alvaro Forteza & Martín Rama, 2000. "Labor Market "Rigidity" and the Success of Economic Reforms Across more than One Hundred Countries," Documentos de Trabajo (working papers) 0600, Department of Economics - dECON.
    4. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    5. Matshe, Innocent & Young, Trevor, 2004. "Off-farm labour allocation decisions in small-scale rural households in Zimbabwe," Agricultural Economics, Blackwell, vol. 30(3), pages 175-186, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anda David & Mohamed Ali Marouani, 2013. "The Impact of Labor Mobility on Unemployment: A Comparison between Jordan and Tunisia," Working Papers 823, Economic Research Forum, revised Dec 2013.
    2. Jadotte, Evans, 2009. "International Migration, Remittances and Labour Supply: The Case of the Republic of Haiti," WIDER Working Paper Series 028, World Institute for Development Economic Research (UNU-WIDER).
    3. Ernesto M. Pernia, 2011. "Is labor export good development policy?," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 48(1), pages 13-34, June.
    4. Farid Makhlouf & Mazhar Mughal, 2013. "Remittances, Dutch Disease, And Competitiveness: A Bayesian Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 67-97, June.
    5. Luis Arango & Dolores Mata & Nataly Obando, 2015. "Echoes of the crises in Spain and US in the Colombian labor market: a differences-in-differences approach," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, pages 441-477.
    6. Kiawu, James & Jones, Keithly G, 2013. "Implications of food aid and remittances for West African food import demand," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(1), July.
    7. Anda David & Mohamed Ali Marouani, 2015. "Migration and Employment Interactions in a Crisis Context: the case of Tunisia," Working Papers 20150007, Université Paris 1 Panthéon Sorbonne, UMR Développement et Sociétés.
    8. Pamela Coke Hamilton & Yvonne Tsikata & Emmanuel Pinto Moreira, 2009. "Accelerating Trade and Integration in the Caribbean : Policy Options for Sustained Growth, Job Creation, and Poverty Reduction," World Bank Publications, The World Bank, number 2652.
    9. Guha, Puja, 2013. "Macroeconomic effects of international remittances: The case of developing economies," Economic Modelling, Elsevier, vol. 33(C), pages 292-305.
    10. Mora, J.J., 2013. "Gender differences between remittances and labor participation in developing countries: A cross-section analysis of Colombia in year 2008," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(1), pages 99-112.
    11. World Bank, 2006. "Exploring Lebanon's Growth Prospects," World Bank Other Operational Studies 13053, The World Bank.
    12. Jadotte, Evans & Ramos, Xavier, 2015. "The Effect of Remittances on Labour Supply in the Republic of Haiti," IZA Discussion Papers 9541, Institute for the Study of Labor (IZA).
    13. Mahalia Jackman, 2014. "A Note on the Labor Market Effects of Remittances in Latin American and Caribbean Countries: Do Thresholds Exist?," The Developing Economies, Institute of Developing Economies, vol. 52(1), pages 52-67, March.

    More about this item

    Keywords

    Jamaica; remittances; labor supply; tax policy; general equilibrium;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:integr:0452. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jong-Eun Lee). General contact details of provider: http://edirc.repec.org/data/desejkr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.