 Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for JamaicaMaurizio Bussolo and Denis Medvedev Journal of Economic Integration, 2008, vol. 23, 734-764 Abstract: Econometric analysis established a negative relationship between labor supply and remittances in Jamaica. We incorporate this ex-post evidence in a general equilibrium model to investigate economy-wide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica’s export base and small manufacturing importcompeting sector. Within the narrow margins of maneuver of a highly indebted government, we show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially worrisome effects of remittances. Keywords: Jamaica; remittances; labor supply; tax policy; general equilibrium (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0452 Access Statistics for this article Journal of Economic Integration is currently edited by Seongeun Kim More articles in Journal of Economic Integration from Center for Economic Integration, Sejong University Contact information at EDIRC. |
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