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Remittances and inequality: A dynamic migration model

  • Frederic Docquier

    ()

    (FNRS and IRES, Universite Catholique de Louvain)

  • Hillel Rapoport

    ()

    (Department of Economics, Bar-Ilan University, CADRE, Universite de Lille 2, and CReAM, University College London)

  • I-Ling Shen

    ()

    (IRES, Universite Catholique de Louvain)

We develop a model to study the effects of migration and remittances on inequality in the origin communities. While wealth inequality is shown to be monotonically reduced along the time-span, the short- and the long-run impacts on income inequality may be of opposite signs, suggesting that the dynamic relationship between migration/remittances and inequality may well be characterized by an inverse U-shaped pattern. This is consistent with the findings of the empirical literature, yet offers a different interpretation from the usually assumed migration network effects. With no need to endogenize migration costs through the role of migration networks, we generate the same result via intergenerational wealth accumulation.

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Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 0614.

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Date of creation: Dec 2006
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Handle: RePEc:crm:wpaper:0614
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  1. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA).
  2. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July.
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