IDEAS home Printed from https://ideas.repec.org/p/unm/unumer/2008063.html
   My bibliography  Save this paper

Worker remittances, migration, accumulation and growth in poor developing countries

Author

Listed:
  • Ziesemer, Thomas

    () (UNU-MERIT, and Maastricht University)

Abstract

The impact of migration and worker remittances on literacy, accumulation of capital and growth is analyzed for a panel of countries with per capita income below $1200 (2000). We estimate regressions for dynamic equations of migration, worker remittances, savings, investment, tax revenues, public expenditure on education, interest rates, literacy, labour force growth, development aid and GDP per capita growth, using dynamic panel data methods. The estimated equations are then integrated to a dynamic system that allows for simulations using the whole integrated system allowing conceptually for the open economy aspects aid, trade, capital movements and migration. The linear-quadratic impact of the income difference between rich and poor countries on remittances and migration generates some highly non-linear results in the baseline simulation. Then we analyze the counterfactuals "remittances send only 50%" or "no net migration". The results for the direct effects are that emigration lowers savings and labour force growth. The total effect of net migration on GDP per capita is to increase the growth rate until 2150 and the effect on levels runs up to 7% above the baseline value. Remittances enhance savings, public expenditures on education and growth, but reduce tax revenues and emigration. These latter two effects, however, are outweighed by the indirect effect of remittances on savings, which have a strongly positive impact on tax revenues and emigration, indicating that conclusions from single equation regressions maybe misleading and indirect effects may dominate for some variables or strongly reduce the direct effects. The total effect of remittances on levels and growth rates of GDP per capita, investment and literacy are positive.

Suggested Citation

  • Ziesemer, Thomas, 2008. "Worker remittances, migration, accumulation and growth in poor developing countries," MERIT Working Papers 063, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2008063
    as

    Download full text from publisher

    File URL: https://www.merit.unu.edu/publications/wppdf/2008/wp2008-063.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Isabel Ruiz & Elias Shukralla & Carlos Vargas-Silva, 2009. "Remittances, Institutions and Growth: A Semiparametric Study," International Economic Journal, Taylor & Francis Journals, vol. 23(1), pages 111-119.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Verner, Dorte, 2005. "What factors influence world literacy? is Africa different?," Policy Research Working Paper Series 3496, The World Bank.
    4. Vargas-Silva, Carlos & Jha, Shikha & Sugiyarto, Guntur, 2009. "Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth," ADB Economics Working Paper Series 182, Asian Development Bank.
    5. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
    6. Wim Naudé, 2009. "Natural Disasters and International Migration from Sub-Saharan Africa," Migration Letters, Transnational Press London, UK, vol. 6(2), pages 165-176, October.
    7. Thomas H.W. Ziesemer, 2010. "Developing Countries’ Net-migration: The Impact of Economic Opportunities, Disasters, Conflicts, and Political Instability," International Economic Journal, Taylor & Francis Journals, vol. 25(3), pages 373-386, June.
    8. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    9. Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn, 2009. "Remittances and economic growth in Latin America and the Caribbean: The Impact of the human capital development," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46751, Southern Agricultural Economics Association.
    10. Thomas Ziesemer, 2011. "Growth with endogenous migration hump and the multiple, dynamically interacting effects of aid in poor developing countries," Applied Economics, Taylor & Francis Journals, vol. 43(30), pages 4865-4878.
    11. Ziesemer, Thomas H.W., 2010. "The impact of the credit crisis on poor developing countries: Growth, worker remittances, accumulation and migration," Economic Modelling, Elsevier, vol. 27(5), pages 1230-1245, September.
    12. Hristos Doucouliagos & Martin Paldam, 2006. "Aid Effectiveness on Accumulation: A Meta Study," Kyklos, Wiley Blackwell, vol. 59(2), pages 227-254, May.
    13. Stark, Oded & Bloom, David E, 1985. "The New Economics of Labor Migration," American Economic Review, American Economic Association, vol. 75(2), pages 173-178, May.
    14. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    15. Miguel D. Ramirez & Hari Sharma, 2009. "Remittances and Growth in Latin America: A Panel Unit Root and Panel Cointegration Analysis," Estudios Economicos de Desarrollo Internacional, Euro-American Association of Economic Development, vol. 9(1).
    16. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
    17. Thanh Le, 2009. "Trade, Remittances, Institutions, and Economic Growth," International Economic Journal, Taylor & Francis Journals, vol. 23(3), pages 391-408.
    18. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    19. Timothy J. Hatton & Jeffrey G. Williamson, 2003. "Demographic and Economic Pressure on Emigration out of Africa," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 465-486, September.
    20. Orazio P. Attanasio & Lucio Picci & Antonello E. Scorcu, 2000. "Saving, Growth, and Investment: A Macroeconomic Analysis Using a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 182-211, May.
    21. Krishna Mazumdar, 2005. "Socio-economic factors determining adult literacy in developing countries," International Journal of Social Economics, Emerald Group Publishing, vol. 32(1/2), pages 98-120, January.
    22. Carlos Vargas-Silva & Peng Huang, 2006. "Macroeconomic determinantsof workers' remittances: Hostversus home country's economic conditions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(1), pages 81-99.
    23. Sufian Eltayeb Mohamed, 2009. "Workers’ Remittances and Growth in MENA Labor Exporting Countries," Working Papers 2009.10, International Network for Economic Research - INFER.
    24. Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1-2), pages 701-709, January.
    25. Dramane Coulibaly, 2009. "Macroeconomic Determinants of Migrants' Remittances: New Evidence from a panel VAR," Documents de travail du Centre d'Economie de la Sorbonne 09007, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    26. Timmer, Marcel P. & Szirmai, Adam, 2000. "Productivity growth in Asian manufacturing: the structural bonus hypothesis examined," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 371-392, December.
    27. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
    28. Ziesemer Thomas H.W., 2009. "Worker Remittances and Growth: The Physical and Human Capital Channels," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(6), pages 743-773, December.
    29. El-Sakka, M. I. T. & McNabb, Robert, 1999. "The Macroeconomic Determinants of Emigrant Remittances," World Development, Elsevier, vol. 27(8), pages 1493-1502, August.
    30. Niimi, Yoko & Ozden, Caglar, 2006. "Migration and remittances : causes and linkages," Policy Research Working Paper Series 4087, The World Bank.
    31. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    32. Bardhan, Pranab K & Lewis, Sydney, 1970. "Models of Growth with Imported Inputs," Economica, London School of Economics and Political Science, vol. 37(148), pages 373-385, November.
    33. Gyan Pradhan & Mukti Upadhyay & Kamal Upadhyaya, 2008. "Remittances and economic growth in developing countries," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(3), pages 497-506.
    34. Carlos Vargas-Silva, 2007. "Measuring the macroeconomic impact of workers' remittances in a data-rich environment," Applied Financial Economics Letters, Taylor and Francis Journals, vol. 3(6), pages 359-363.
    35. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    36. Toxopeus, Helen S. & Lensink, Robert, 2007. "Remittances and Financial Inclusion in Development," WIDER Working Paper Series 049, World Institute for Development Economic Research (UNU-WIDER).
    37. Richard H. Adams, 2006. "International Remittances and the Household: Analysis and Review of Global Evidence," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 396-425, December.
    38. Dilip Ratha & William Shaw, 2007. "South-South Migration and Remittances," World Bank Publications, The World Bank, number 6733, December.
    39. Acosta, Pablo & Calderon, Cesar & Fajnzylber, Pablo & Lopez, Humberto, 2008. "What is the Impact of International Remittances on Poverty and Inequality in Latin America?," World Development, Elsevier, vol. 36(1), pages 89-114, January.
    40. Ranis, Gustav, 2007. "Migration, Trade, Capital and Development: Substitutes, Complements and Policies," Center Discussion Papers 28421, Yale University, Economic Growth Center.
    41. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000. "What Drives Private Saving Across the World?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 165-181, May.
    42. Anna Mayda, 2010. "International migration: a panel data analysis of the determinants of bilateral flows," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1249-1274, September.
    43. Dilek Cinar & Frédéric Docquier, 2004. "Brain drain and Remittances: implications for the source country," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(1), pages 103-118.
    44. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    45. Robert M Burgess & V. Haksar, 2005. "Migration and Foreign Remittances in the Philippines," IMF Working Papers 05/111, International Monetary Fund.
    46. Catrinescu, Natalia & Leon-Ledesma, Miguel & Piracha, Matloob & Quillin, Bryce, 2009. "Remittances, Institutions, and Economic Growth," World Development, Elsevier, vol. 37(1), pages 81-92, January.
    47. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    48. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    49. Michael T. Gapen & Ralph Chami & Peter J Montiel & Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 09/153, International Monetary Fund.
    50. Simeon Djankov & Jose Montalvo & Marta Reynal-Querol, 2008. "The curse of aid," Journal of Economic Growth, Springer, vol. 13(3), pages 169-194, September.
    51. B. Bhaskara Rao & Toani Takirua, 2010. "The effects of exports, aid and remittances on output: the case of Kiribati," Applied Economics, Taylor & Francis Journals, vol. 42(11), pages 1387-1396.
    52. repec:dgr:unumer:2009020 is not listed on IDEAS
    53. Laurent Gheeraert & Ritha Sukadi Mata & Daniel Traca, 2010. "Remittances and Domestic Investment in Developing Countries: An Analysis of the Role of Financial Sector Development," Working Papers CEB 10-013.RS, ULB -- Universite Libre de Bruxelles.
    54. Gustav Ranis, 2007. "Migration, Trade, Capital and Development: Substitutes, Complements and Policies," Working Papers 950, Economic Growth Center, Yale University.
    55. Andreas Billmeier & Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia—Institutions, Remittances, or Natural Resources?," IMF Working Papers 07/157, International Monetary Fund.
    56. Hineline, David R., 2008. "Parameter heterogeneity in growth regressions," Economics Letters, Elsevier, vol. 101(2), pages 126-129, November.
    57. B. Gabriela Mundaca, 2009. "Remittances, Financial Market Development, and Economic Growth: The Case of Latin America and the Caribbean," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 288-303, May.
    58. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    59. Connel Fullenkamp & Thomas F. Cosimano & Michael T. Gapen & Ralph Chami & Peter J Montiel & Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 259, International Monetary Fund.
    60. Adams, Richard H., Jr., 2008. "The demographic, economic and financial determinants of international remittances in developing countries," Policy Research Working Paper Series 4583, The World Bank.
    61. Nakamura, Alice & Nakamura, Masao, 1998. "Model specification and endogeneity," Journal of Econometrics, Elsevier, vol. 83(1-2), pages 213-237.
    62. Hatton, Timothy J & Williamson, Jeffrey G, 2002. "Out of Africa? Using the Past to Project African Emigration Pressure in the Future," Review of International Economics, Wiley Blackwell, vol. 10(3), pages 556-573, August.
    63. repec:idb:brikps:publication-detail,7101.html?id=25235 is not listed on IDEAS
    64. Thomas H.W. ZIESEMER, 2010. "Worker Remittances In Growth Regressions: The Problem Of Collinearity," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
    65. Ronald Skeldon, 2008. "International Migration as a Tool in Development Policy: A Passing Phase?," Population and Development Review, The Population Council, Inc., vol. 34(1), pages 1-18.
    66. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    67. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    68. Bertoli Simone, 2006. "Remittances and the Dynamics of Human Capitalin the Recipient Country," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200607, University of Turin.
    69. Dramane Coulibaly, 2009. "Macroeconomic Determinants of Migrants' Remittances: New Evidence from a panel VAR," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00367704, HAL.
    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. Ziesemer, Thomas, 2010. "Net-immigration of developing countries: The role of economic determinants, disasters, conflicts, and political instability," MERIT Working Papers 009, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Chepel, S. & Bondarenko, K., 2015. "Is the External Labor Migration an Economic Growth Factor: Econometric Analysis and Policy Implications for the CIS Countries," Journal of the New Economic Association, New Economic Association, vol. 28(4), pages 142-166.
    3. Mohammad Salahuddin & Jeff Gow, 2015. "The relationship between economic growth and remittances in the presence of cross-sectional dependence," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(1), pages 207-221, January-M.
    4. repec:eur:ejmejr:39 is not listed on IDEAS
    5. repec:taf:apeclt:v:23:y:2016:i:16:p:1177-1181 is not listed on IDEAS
    6. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.
    7. Hübler, Michael, 2016. "Does Migration Support Technology Diffusion in Developing Countries?," World Development, Elsevier, vol. 83(C), pages 148-162.
    8. repec:cai:edddbu:edd_311_0097 is not listed on IDEAS
    9. Iryna Kurevina, 2014. "Remittances, Consumption And Investments In Ukraine: VAR/VEC Estimates," Ukrainian Journal Ekonomist, Yuriy Kovalenko, issue 2, pages 11-14, February.
    10. Siddique, Hafiz Muhammad Abubakar & Shehzadi, Iram & Manzoor, Muhammad Rizwan & Majeed, Muhammad Tariq, 2016. "Do international migration and remittances reduce poverty in developing countries?," MPRA Paper 71246, University Library of Munich, Germany, revised 2016.
    11. Ziesemer, Thomas, 2009. "Remittances, lagged dependent variables and migration stocks as determinants of migration from developing countries," MERIT Working Papers 007, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    12. Gnangnon, Sèna Kimm, 2014. "The Effect of Development Aid Unpredictability and Migrants’ Remittances on Fiscal Consolidation in Developing Countries," World Development, Elsevier, vol. 54(C), pages 168-190.
    13. Mitrut, Andreea & Wolff, François-Charles, 2014. "Remittances after natural disasters: Evidence from the 2004 Indian tsunami," Working Papers in Economics 604, University of Gothenburg, Department of Economics.
    14. repec:rsr:supplm:v:65:y:2017:i:6:p:134-143 is not listed on IDEAS
    15. Gloria Clarissa O. Dzeha, 2016. "The decipher, theory or empirics: a review of remittance studies," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 5(2), pages 113-134.
    16. repec:taf:oxdevs:v:44:y:2016:i:4:p:458-478 is not listed on IDEAS
    17. Ali M. Kutan & Yaz Gülnür Muradoğlu & Zhong Yu, 2016. "Worldwide impact of IMF policies during the Asian crisis: who does the IMF help, creditors or crisis countries?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 19(2), pages 116-147, June.
    18. Jounghyeon Kim, 2013. "Remittances and Currency Crisis: The Case of Developing and Emerging Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(6), pages 88-111, November.
    19. Bang, James T. & Mitra, Aniruddha & Wunnava, Phanindra V., 2016. "Do remittances improve income inequality? An instrumental variable quantile analysis of the Kenyan case," Economic Modelling, Elsevier, vol. 58(C), pages 394-402.
    20. Sokchea Lim & Walter O. Simmons, 2016. "What Have Remittances Done to Development? Evidence from the Caribbean Community and Common Market," The Review of Black Political Economy, Springer;National Economic Association, vol. 43(3), pages 343-361, December.

    More about this item

    Keywords

    migration; remittances; growth; capital accumulation;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:unm:unumer:2008063. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten). General contact details of provider: http://edirc.repec.org/data/meritnl.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.