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Migratory Equilibria with Invested Remittances

  • Claire Naiditch

    ()

    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Radu Vranceanu

    ()

    (Economics Department - ESSEC Business School)

This paper analyzes international migrations when migrants invest part of their income in their origin country. This investment contributes to increase capital intensity and wages in the origin country, thus reducing the scope for migrating. We show that a non-total migratory equilibrium can exist if the foreign wage is not too high, and/or migratory and transfer costs are not too low. Exogenous shocks, such as an increase in the foreign wage, lead to an increase in optimal remittances per migrant, and a higher wage in the origin country. Yet the net effect on the equilibrium number of migrants is positive. Hence, in equilibrium, optimal remittances and number of migrants are positively related. We use data from twenty fi ve countries from Eastern Europe and Central Asia in 2000 in order to test for this implication of our model. OLS and bootstrap estimates put forward a positive elasticity of the number of migrants with respect to remittances per migrant. Policy implications follow.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00376472.

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Date of creation: Apr 2009
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Handle: RePEc:hal:cesptp:halshs-00376472
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  1. Dimova, Ralitza & Wolff, François-Charles, 2009. "Remittances and Chain Migration: Longitudinal Evidence from Bosnia and Herzegovina," IZA Discussion Papers 4083, Institute for the Study of Labor (IZA).
  2. Claire Naiditch & Radu Vranceanu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00318870, HAL.
  3. Riccardo Faini, 2006. "Remittances and the brain drain," Development Working Papers 214, Centro Studi Luca d\'Agliano, University of Milano.
  4. Miguel León-Ledesma & Matloob Piracha, 2001. "International Migration and the Role of Remittances in Eastern Europe," Studies in Economics 0113, School of Economics, University of Kent.
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  6. Jean-Paul Azam & Flore Gubert, 2005. "Those in Kayes. The Impact of Remittances on Their Recipients in Africa," Revue économique, Presses de Sciences-Po, vol. 56(6), pages 1331-1358.
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  18. 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.
  19. Riccardo Faini, 2007. "Remittances and the Brain Drain: Do More Skilled Migrants Remit More?," World Bank Economic Review, World Bank Group, vol. 21(2), pages 177-191, May.
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