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Migratory equilibria with invested remittances

Listed author(s):
  • Radu Vranceanu

    ()

    (Economics Department - Essec Business School)

  • Claire Naiditch

    ()

    (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 five 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 Post-Print with number hal-00553550.

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Date of creation: Apr 2009
Publication status: Published in ESSEC Working paper. Document de Recherche ESSEC / Centre de recherche de l'ESSEC ISSN : 1291-961.. 2009
Handle: RePEc:hal:journl:hal-00553550
Note: View the original document on HAL open archive server: https://hal-essec.archives-ouvertes.fr/hal-00553550
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  1. Faini, Riccardo, 2006. "Remittances and the Brain Drain," CEPR Discussion Papers 5720, C.E.P.R. Discussion Papers.
  2. Naiditch, Claire & Vranceanu, Radu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Economic Systems, Elsevier, vol. 33(1), pages 60-82, March.
  3. 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.
  4. Stark, Oded & Wang, You Qiang, 2002. "Migration Dynamics," Economics Series 112, Institute for Advanced Studies.
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  6. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  7. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA).
  8. Ralitza Dimova & François-Charles Wolff, 2015. "Remittances and Chain Migration: Longitudinal Evidence from Bosnia and Herzegovina," Journal of Development Studies, Taylor & Francis Journals, vol. 51(5), pages 554-568, May.
  9. 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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  14. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-930, September.
  15. Ilahi, Nadeem & Jafarey, Saqib, 1999. "Guestworker migration, remittances and the extended family: evidence from Pakistan," Journal of Development Economics, Elsevier, vol. 58(2), pages 485-512, April.
  16. Lucas, Robert E B, 1985. "Mines and Migrants in South Africa," American Economic Review, American Economic Association, vol. 75(5), pages 1094-1108, December.
  17. Schiff, Maurice, 2002. "Love thy neighbor: trade, migration, and social capital," European Journal of Political Economy, Elsevier, vol. 18(1), pages 87-107, March.
  18. Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March.
  19. Hendrik P. van Dalen & George Groenewold & Tineke Fokkema, 2005. "Remittances and their Effect on Emigration Intentions in Egypt, Morocco and Turkey," Tinbergen Institute Discussion Papers 05-030/1, Tinbergen Institute.
  20. McCormick, Barry & Wahba, Jackline, 2004. "Return International Migration and Geographical Inequality: The Case of Egypt," WIDER Working Paper Series 007, World Institute for Development Economic Research (UNU-WIDER).
  21. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
  22. 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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