IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/4143.html
   My bibliography  Save this paper

Do remittances have a flip side ? A general equilibrium analysis of remittances, labor supply responses, and policy options for Jamaica

Author

Listed:
  • Bussolo, Maurizio
  • Medvedev, Denis

Abstract

Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing the reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, the authors show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially negative effects of remittances.

Suggested Citation

  • Bussolo, Maurizio & Medvedev, Denis, 2007. "Do remittances have a flip side ? A general equilibrium analysis of remittances, labor supply responses, and policy options for Jamaica," Policy Research Working Paper Series 4143, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4143
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/02/21/000016406_20070221120651/Rendered/PDF/wps4143.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1339-1382.
    2. Alvaro Forteza & Martín Rama, 2000. "Labor Market "Rigidity" and the Success of Economic Reforms Across more than One Hundred Countries," Documentos de Trabajo (working papers) 0600, Department of Economics - dECON.
    3. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    4. Matshe, Innocent & Young, Trevor, 2004. "Off-farm labour allocation decisions in small-scale rural households in Zimbabwe," Agricultural Economics, Blackwell, vol. 30(3), pages 175-186, May.
    5. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1, July.
    6. Funkhouser, Edward, 1992. "Migration from Nicaragua: some recent evidence," World Development, Elsevier, vol. 20(8), pages 1209-1218, August.
    7. International Monetary Fund, 2004. "Republic of Korea: 2003 Article IV Consultation—Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of ," IMF Staff Country Reports 2004/044, International Monetary Fund.
    8. International Monetary Fund, 2004. "Tunisia: 2004 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tunisia," IMF Staff Country Reports 2004/359, International Monetary Fund.
    9. International Monetary Fund, 2004. "United Arab Emirates: 2004 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the United Arab Emirates," IMF Staff Country Reports 2004/175, International Monetary Fund.
    10. Barzel, Yoram & McDonald, Richard J, 1973. "Assets, Subsistence, and The Supply Curve of Labor," American Economic Review, American Economic Association, vol. 63(4), pages 621-633, September.
    Full references (including those not matched with items on IDEAS)

    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. Matti Ylönen, 2017. "Policy diffusion within international organizations: A bottom-up analysis of International Monetary Fund tax work in Panama, Seychelles, and the Netherlands," WIDER Working Paper Series 157, World Institute for Development Economic Research (UNU-WIDER).
    2. Matti Ylönen, 2017. "Policy diffusion within international organizations: A bottom-up analysis of International Monetary Fund tax work in Panama, Seychelles, and the Netherlands," WIDER Working Paper Series wp-2017-157, World Institute for Development Economic Research (UNU-WIDER).
    3. Lydia FRAILE, 2009. "Lessons from Latin America's neo-liberal experiment: An overview of labour and social policies since the 1980s," International Labour Review, International Labour Organization, vol. 148(3), pages 215-233, September.
    4. Paul, Saumik, 2018. "The Effect of Emigration on Household Labor Supply: Evidence from Central Asia and South Caucasus," ADBI Working Papers 822, Asian Development Bank Institute.
    5. Zhai, Fan & Hertel, Thomas, 2008. "Economic and Poverty Impacts of Agricultural Price Distortions in China," Conference papers 331669, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Stefan Pahl & Marcel P. Timmer, 2020. "Do Global Value Chains Enhance Economic Upgrading? A Long View," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1683-1705, July.
    7. Almeida, Rita & Carneiro, Pedro, 2006. "Enforcement of Regulation, Informal Labour, Firm Size and Firm Performance," CEPR Discussion Papers 5976, C.E.P.R. Discussion Papers.
    8. Almeida, Rita K. & Carneiro, Pedro, 2005. "Enforcement of Regulation, Informal Labor and Firm Performance," IZA Discussion Papers 1759, Institute of Labor Economics (IZA).
    9. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    10. Ulyssea, Gabriel & Ponczek, Vladimir, 2018. "Enforcement of Labor Regulation and the Labor Market Effects of Trade: Evidence from Brazil," IZA Discussion Papers 11783, Institute of Labor Economics (IZA).
    11. Alejandro Micco & Carmen Pagés-Serra, 2004. "Protección del empleo y flujo bruto de puestos de trabajo: un enfoque de diferencias en diferencias," Research Department Publications 4366, Inter-American Development Bank, Research Department.
    12. Carmen Pagés-Serra & Alejandro Micco, 2008. "Efectos económicos de la protección del empleo: Elementos de juicio a partir de datos internacionales a nivel de actividad económica," Research Department Publications 4497, Inter-American Development Bank, Research Department.
    13. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4657-4702, Elsevier.
    14. Ravi KANBUR & Lucas RONCONI, 2018. "Enforcement matters: The effective regulation of labour," International Labour Review, International Labour Organization, vol. 157(3), pages 331-356, September.
    15. Pierre, Gaëlle & Scarpetta, Stefano, 2004. "Employment Regulations through the Eyes of Employers: Do They Matter and How Do Firms Respond to Them?," IZA Discussion Papers 1424, Institute of Labor Economics (IZA).
    16. Djavad Salehi-Isfahani & Russell D. Murphy, 2006. "Labor market flexibility and investment in human capital," Working Papers e06-5, Virginia Polytechnic Institute and State University, Department of Economics.
    17. Angel-Urdinola, Diego F. & Kuddo, Arvo, 2010. "Key characteristics of employment regulation in the Middle East and North Africa," Social Protection Discussion Papers and Notes 55674, The World Bank.
    18. Pierre, Gaelle & Scarpetta, Stefano, 2007. "How labor market policies can combine workers'protection with job creation : a partial review of some key issues and policy options," Social Protection Discussion Papers and Notes 41439, The World Bank.
    19. Weller, Jürgen, 2007. "La flexibilidad del mercado de trabajo en América Latina y el Caribe. Aspectos del debate, alguna evidencia y políticas," Macroeconomía del Desarrollo 5429, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    20. Alejandro Micco & Carmen Pagés-Serra, 2004. "Employment Protection and Gross Job Flows: A Differences-in-Differences Approach," Research Department Publications 4365, Inter-American Development Bank, Research Department.

    More about this item

    Keywords

    Labor Markets; Economic Theory&Research; Remittances; Markets and Market Access; Economic Growth;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    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:wbk:wbrwps:4143. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    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.