IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-04141685.html
   My bibliography  Save this paper

The effects of migration and remittances on development and capital in Caribbean Small Island Developing States

Author

Listed:
  • Zouhair Aït Benhamou

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Lesly Cassin

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper puts forward a modified OLG framework for high migration countries such as Caribbean islands, to link economic growth and demographic features. Our theoretical model captures the potential effects of migration on the households' choices in terms of savings, fertility and education, and thus on the accumulation of human and physical capital. Through a numerical analysis we study specifically five countries. We find that households in Jamaica, Haiti and Dominican Republic invest more in education for future generations and increase their fertility rate. Thus due to migration, their economic growth is driven by accumulation of efficient units of labor. For Barbados or Trinidad and Tobago, the benefits from education are dwarfed respectively by a low migration premium or a low level of remittances. Their economic growth is therefore driven by a high accumulation of physical capital. Second, we introduce frictions on the capital market in order to account for the imperfections in the interest rate adjustments to the marginal productivity of capital. For the studied islands, physical capital accumulation on the one hand and economic growth on the other hand show trade-offs between short-run and long-run if the frictions are reduced.

Suggested Citation

  • Zouhair Aït Benhamou & Lesly Cassin, 2018. "The effects of migration and remittances on development and capital in Caribbean Small Island Developing States," Working Papers hal-04141685, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141685
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141685
    as

    Download full text from publisher

    File URL: https://hal.science/hal-04141685/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cardia, Emanuela & Michel, Philippe, 2004. "Altruism, intergenerational transfers of time and bequests," Journal of Economic Dynamics and Control, Elsevier, vol. 28(8), pages 1681-1701, June.
    2. Zhang, Junsen & Nishimura, Kazuo, 1993. "The old-age security hypothesis revisited," Journal of Development Economics, Elsevier, vol. 41(1), pages 191-202, June.
    3. Schmitt-Grohe, Stephanie & Uribe, Martin, 2003. "Closing small open economy models," Journal of International Economics, Elsevier, vol. 61(1), pages 163-185, October.
    4. Docquier, Frederic & Paddison, Oliver & Pestieau, Pierre, 2007. "Optimal accumulation in an endogenous growth setting with human capital," Journal of Economic Theory, Elsevier, vol. 134(1), pages 361-378, May.
    5. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and Least Developed Countries," Post-Print hal-00594797, HAL.
    6. Alcaraz, Carlo & Chiquiar, Daniel & Salcedo, Alejandrina, 2012. "Remittances, schooling, and child labor in Mexico," Journal of Development Economics, Elsevier, vol. 97(1), pages 156-165.
    7. de la Croix, David & Docquier, Frederic & Liegeois, Philippe, 2007. "Income growth in the 21st century: Forecasts with an overlapping generations model," International Journal of Forecasting, Elsevier, vol. 23(4), pages 621-635.
    8. Dean Yang, 2011. "Migrant Remittances," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 129-152, Summer.
    9. Docquier, Frédéric & Faye, Ousmane & Pestieau, Pierre, 2008. "Is migration a good substitute for education subsidies?," Journal of Development Economics, Elsevier, vol. 86(2), pages 263-276, June.
    10. Dean Yang, 2008. "International Migration, Remittances and Household Investment: Evidence from Philippine Migrants’ Exchange Rate Shocks," Economic Journal, Royal Economic Society, vol. 118(528), pages 591-630, April.
    11. Pengfei Wang & Yi Wen, 2012. "Hayashi Meets Kiyotaki and Moore: A Theory of Capital Adjustment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 207-225, April.
    12. L. Adrianto & Y. Matsuda, 2004. "Study on Assessing Economic Vulnerability of Small Island Regions," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 6(3), pages 317-336, September.
    13. Combes, Jean-Louis & Ebeke, Christian, 2011. "Remittances and Household Consumption Instability in Developing Countries," World Development, Elsevier, vol. 39(7), pages 1076-1089, July.
    14. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 828-854.
    15. King, Robert G. & Rebelo, Sergio T., 1999. "Resuscitating real business cycles," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 14, pages 927-1007, Elsevier.
    16. Luca Marchiori & Patrice Pieretti & Benteng Zo, 2008. "Brain Drain, Remittances, and Fertility," Economie Internationale, CEPII research center, issue 115, pages 9-42.
    17. repec:bla:econom:v:48:y:1981:i:189:p:1-15 is not listed on IDEAS
    18. John Connell & Dennis Conway, 2000. "Migration and remittances in island microstates: a comparative perspective on the South Pacific and the Caribbean," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 24(1), pages 52-78, March.
    19. Patrick Guillaumont, 2009. "Caught in a trap. Identifying the least developed countries," Post-Print hal-00436331, HAL.
    20. Sobiech, Izabela, 2019. "Remittances, finance and growth: Does financial development foster the impact of remittances on economic growth?," World Development, Elsevier, vol. 113(C), pages 44-59.
    21. Mizushima, Atsue, 2009. "Intergenerational transfers of time and public long-term care with an aging population," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 572-581, December.
    22. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Post-Print halshs-00512159, HAL.
    23. Richard P.C. Brown & Dennis A. Ahlburg, 1999. "Remittances in the South Pacific," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 26(1/2/3), pages 325-344, January.
    24. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
    25. Lino Briguglio & Gordon Cordina & Nadia Farrugia & Stephanie Vella, 2009. "Economic Vulnerability and Resilience: Concepts and Measurements," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 229-247.
    26. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    27. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-224, January.
    28. Jorge Durand & William Kandel & Emilio Parrado & Douglas Massey, 1996. "International migration and development in mexican communities," Demography, Springer;Population Association of America (PAA), vol. 33(2), pages 249-264, May.
    29. Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March.
    30. Lim, Sokchea & Simmons, Walter O., 2015. "Do remittances promote economic growth in the Caribbean Community and Common Market?," Journal of Economics and Business, Elsevier, vol. 77(C), pages 42-59.
    31. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
    32. van der Velde, M. & Green, S.R. & Vanclooster, M. & Clothier, B.E., 2007. "Sustainable development in small island developing states: Agricultural intensification, economic development, and freshwater resources management on the coral atoll of Tongatapu," Ecological Economics, Elsevier, vol. 61(2-3), pages 456-468, March.
    33. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151, September.
    34. Briguglio, Lino Pascal, 1998. "Small Country Size and Returns to Scale in Manufacturing," World Development, Elsevier, vol. 26(3), pages 507-515, March.
    35. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Post-Print hal-00488679, HAL.
    36. Ms. Prachi Mishra, 2006. "Emigration and Brain Drain: Evidence From the Caribbean," IMF Working Papers 2006/025, International Monetary Fund.
    37. Michel Beine & Frederic Docquier & Hillel Rapoport, 2006. "Measuring International Skilled Migration: New Estimates Controlling for Age of Entry," RF Berlin - CReAM Discussion Paper Series 0613, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    38. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    39. Emmanuel Thibault, 2008. "Dynamic efficiency and intergenerational altruism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 679-687, July.
    40. Favero, Carlo A., 2001. "Applied Macroeconometrics," OUP Catalogue, Oxford University Press, number 9780198296850.
    41. Cynthia Bansak & Brian Chezum, 2009. "How Do Remittances Affect Human Capital Formation of School-Age Boys and Girls?," American Economic Review, American Economic Association, vol. 99(2), pages 145-148, May.
    42. Schoonbroodt, Alice & Tertilt, Michèle, 2014. "Property rights and efficiency in OLG models with endogenous fertility," Journal of Economic Theory, Elsevier, vol. 150(C), pages 551-582.
    43. Osili, Una Okonkwo, 2007. "Remittances and savings from international migration: Theory and evidence using a matched sample," Journal of Development Economics, Elsevier, vol. 83(2), pages 446-465, July.
    44. repec:wsr:wpaper:y:2015:i:158 is not listed on IDEAS
    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. Cassin, Lesly, 2020. "The effects of migration and pollution on cognitive skills in Caribbean economies: a theoretical analysis," Environment and Development Economics, Cambridge University Press, vol. 25(6), pages 657-686, December.
    2. Renier Steyn & Takawira Munyaradzi Ndofirepi, 2024. "Why do many educated individuals leave Zimbabwe? Economic realities and the draw of developed countries," Insights into Regional Development, VsI Entrepreneurship and Sustainability Center, vol. 6(2), pages 117-133, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ait Benhamou, Zouhair & Cassin, Lesly, 2021. "The impact of remittances on savings, capital and economic growth in small emerging countries," Economic Modelling, Elsevier, vol. 94(C), pages 789-803.
    2. Lesly Cassin, 2018. "The effects of migration and pollution externality on cognitive skills in Caribbean economies: a Theoretical analysis," Working Papers hal-04141708, HAL.
    3. Blancard, Stéphane & Hoarau, Jean-François, 2013. "A new sustainable human development indicator for small island developing states: A reappraisal from data envelopment analysis," Economic Modelling, Elsevier, vol. 30(C), pages 623-635.
    4. Bahadir, Berrak & Chatterjee, Santanu & Lebesmuehlbacher, Thomas, 2018. "The macroeconomic consequences of remittances," Journal of International Economics, Elsevier, vol. 111(C), pages 214-232.
    5. Jean-François Hoarau & Nicolas Lucic, 2022. "Are real merchandise imports per capita a good predictor for the standard of living for the small island world: Testing for the imports-led growth and the growth-led imports hypotheses in panels over ," TEPP Working Paper 2022-16, TEPP.
    6. Angeon, Valérie & Bates, Samuel, 2015. "Reviewing Composite Vulnerability and Resilience Indexes: A Sustainable Approach and Application," World Development, Elsevier, vol. 72(C), pages 140-162.
    7. Bates, Samuel & Angeon, Valérie & Ainouche, Ahmed, 2014. "The pentagon of vulnerability and resilience: A methodological proposal in development economics by using graph theory," Economic Modelling, Elsevier, vol. 42(C), pages 445-453.
    8. Chatterjee, Santanu & Turnovsky, Stephen J., 2018. "Remittances and the informal economy," Journal of Development Economics, Elsevier, vol. 133(C), pages 66-83.
    9. Claire Goavec & Jean-François Hoarau, 2015. "Structural economic vulnerability and tourism dependence: new assessment for small island developing economies [Vulnérabilité économique structurelle et dépendance touristique : quels enseignements," Post-Print hal-01454720, HAL.
    10. Lino P. Briguglio & Melchior Vella, 2015. "Labour demand in the EU and returns to scale: A production function approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(8), pages 1103-1116, December.
    11. Claire GOAVEC & Jean-François HOARAU, 2015. "Vulnérabilité Économique Structurelle Et Dépendance Touristique : Quels Enseignements Pour Les Petites Économies Insulaires En Développement," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 42, pages 157-188.
    12. Michaël Goujon & Jean-François Hoarau, 2015. "A new assessment for the development level of the French overseas economies by implementing the « hybrid » human development index [Une nouvelle mesure du développement des économies ultramarines f," Post-Print halshs-01413356, HAL.
    13. Montalbano, Pierluigi, 2011. "Trade Openness and Developing Countries' Vulnerability: Concepts, Misconceptions, and Directions for Research," World Development, Elsevier, vol. 39(9), pages 1489-1502, September.
    14. Joël CARIOLLE, 2014. "Corruption in Turbulent Times: a Response to Shocks?," Working Papers P106, FERDI.
    15. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    16. Luis Hernando Portillo-Riascos & Edinson Ortiz-Benavides, 2021. "The External Vulnerability of the Colombian Economy 1990-2015: A Comparative Analysis," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 94, pages 11-46, Enero-Jun.
    17. Valérie ANGEON & Jean-François HOARAU, 2015. "Introduction - Les Petites Économies Insulaires : Un Monde À Part Entière ?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 42, pages 5-13.
    18. Joël CARIOLLE, 2014. "Corruption in Turbulent Times: a Response to Shocks?," Working Papers P106, FERDI.
    19. Michaël GOUJON & Jean-François HOARAU, 2015. "Une Nouvelle Mesure Du Développement Des Économies Ultramarines Françaises À Travers L’Application De L’Indicateur De Développement Humain « Hybride »," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 42, pages 55-78.
    20. Genave, Anna & Blancard, Stéphane & Garabedian, Sabine, 2020. "An assessment of energy vulnerability in Small Island Developing States," Ecological Economics, Elsevier, vol. 171(C).

    More about this item

    Keywords

    Migration; Capital Markets; Overlapping Generations Model; Caribbean; Small Island Developing States;
    All these keywords.

    JEL classification:

    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

    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:hal:wpaper:hal-04141685. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.