Worker remittances, migration, accumulation and growth in poor developing countries
Thomas Ziesemer
#2008-063
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.
JEL class.: F22, 24; O15, J61. Keywords: migration, remittances, growth,
accumulation.
UNU-MERIT Working Papers
ISSN 1871-9872