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Remittances and the Wage Impact of Immigration

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  • William W. Olney

Abstract

This paper examines how the outflow of remittances affect the wages of native workers. The model shows that the wage impact of immigration depends on the competing effects of an increase in labor market competition and an increase in the consumer base. Immigrant remittances provide a unique way of isolating this latter effect because they reduce the consumer base but not the workforce. The predictions of the model are tested using an unusually rich German data set that has detailed information on remittances and wages. As expected, the results indicate that a 1 percent increase in remittances depress the wages of native workers by 0.06 percent. Furthermore, remittances predominantly affect workers in nontraded industries that are more reliant on domestic consumption.

Suggested Citation

  • William W. Olney, 2015. "Remittances and the Wage Impact of Immigration," Journal of Human Resources, University of Wisconsin Press, vol. 50(3), pages 694-727.
    • Handle: RePEc:uwp:jhriss:v:50:y:2015:i:3:p:694-727
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    3. Gnangnon, Sèna Kimm, 2020. "Development Aid, Remittances Inflows and Wages in the Manufacturing Sector of Recipient-Countries," EconStor Preprints 213439, ZBW - Leibniz Information Centre for Economics.
    4. Jacobsen Jannes & Krieger Magdalena & Schikora Felicitas & Schupp Jürgen, 2021. "Growing Potentials for Migration Research using the German Socio-Economic Panel Study," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(4), pages 527-549, August.
    5. Schröder Carsten & König Johannes & Fedorets Alexandra & Goebel Jan & Grabka Markus M. & Lüthen Holger & Metzing Maria & Schikora Felicitas & Liebig Stefan, 2020. "The economic research potentials of the German Socio-Economic Panel study," German Economic Review, De Gruyter, vol. 21(3), pages 335-371, September.
    6. Nicole Simpson & Cynthia Bansak, 2019. "Updating an ODA Policy in Canada: The Role of Global Remittances in Development," SPP Briefing Papers, The School of Public Policy, University of Calgary, vol. 12(11), March.
    7. Genc Zhushi & Driton Qehaja, 2024. "Remittances, Migrations Intentions, and Labor Participation in Kosovo," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 145-159.
    8. Croes, Robertico & Ridderstaat, Jorge & van Niekerk, Mathilda, 2018. "Connecting quality of life, tourism specialization, and economic growth in small island destinations: The case of Malta," Tourism Management, Elsevier, vol. 65(C), pages 212-223.

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    More about this item

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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