 Endogenous labor migration and remittances: Macroeconomic and welfare consequencesSokchea Lim, Akm Morshed and Stephen J. Turnovsky Journal of Development Economics, 2023, vol. 163, issue C Abstract: This paper develops a macrodynamic model of two small economies – a host country and a labor-exporting developing country – to address the impact of migrant workers and remittances on the two economies. It endogenizes the migration decision as part of the intertemporal utility maximization of households in the developing economy. This setup captures the dynamic process of migration, in which evolving circumstances may lead to fundamental differences from those based on treating remittances as exogenous. Extensive numerical simulations consider two diverse sources of structural change that impinge directly on the migration-remittance relationship. In both cases the long-run impact on the remittance-GDP ratio differs markedly from the immediate response, primarily as a consequence of the impact on the evolving migration during the transition. The welfare consequences of the different constituents – domestic residents, migrant workers, and host economy native workers – are considered. Alternative tax policies to offset effects, deemed adverse, are also discussed. Keywords: Endogenous labor migration; Remittances; Macroeconomic consequences; Welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:163:y:2023:i:c:s0304387823000652 DOI: 10.1016/j.jdeveco.2023.103110 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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