This paper, using a model comprising two labour sending countries and one labour receiving country, analyses the optimal tax/subsidy policies of countries to control international migration when labour markets are integrated. The analysis shows that the countries of emigration should tax the migrants to maximise national income. This result suggests that the developing and transitional countries need to re-evaluate their policies of supporting migration. The optimal policy of the receiving country is to use discriminatory tax rates where the sending country with higher labour endowment bears a higher tax burden. Abstract: This paper, using a model comprising two labour sending countries and one labour receiving country, analyses the optimal tax/subsidy policies of countries to control international migration when labour markets are integrated. The analysis shows that the countries of emigration should tax the migrants to maximise national income. This result suggests that the developing and transitional countries need to re-evaluate their policies of supporting migration.The optimal policy of the receiving country is to use discriminatory tax rates where the sending country with higher labour endowment bears a higher tax burden.Key Words: labour market integration, remittances, tax JEL Classifications: F15, F22, F24, O24 IntroductionEconomic integration reduces the barriers of movement of goods and factors. Though many countries still maintain high barriers for the movement, especially for labour, it is fair to say that the world is gradually moving towards reduction of the barriers. Economic literature has to some extent already addressed integration that leads to reduction of barriers for the movement of goods and capital. The integration of the labour market, especially the link between labour market 3 integration and remittances is however, a relatively understudied field 1 . This paper addresses this gap in the literature.Integration of labour market should initiate the movement of labour from the low wage to the high wage countries. This phenomenon was observed following the enlargement of the European Union in 2004 which integrated Eastern and Western Europe. Many Eastern European and Turkish migrants regularly send remittances to home countries. In addition, we observe that the global labour market, especially of skilled workers, to some extent has become integrated through the advent of the internet. Many people are now searching for jobs in foreign countries, by themselves, using the internet which was unthinkable just ten years ago. Many of them send remittances to home countries. It can be observed that developing and transitional counties directly or indirectly subsidise/support this migration to increase the inflow of remittances. In doing so, the countries are indirectly competing with each other in the international labour market.In this paper we question this policy of supporting migration for remittances when labour markets are integrated. We show that instead of subsidising, the home...

The modes of remittances of households in Bangladesh have been categorised as 'No Remittances', 'Internal Remittances' and 'International Remittances'. This paper using a Multinomial Logit Model studies the associations between these modes and the households' basic characteristics. The study reveals that household level variables like rural-urban locations, age and sex of the households heads, religion, ratio of male, adult and young members etc. are potentially significant in households' orientation to remittances. Higher education however is not significant. The study surprisingly shows that the households with female heads are more likely to receive both internal and international remittances compared to the households headed by males. JEL Classifications: D01, F24, O53

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Abstract:The recent brain drain literature suggests that the migration of highly skilled people can be beneficial for a country as it gives incentives to form additional human capital. We criticise this claim by developing a career concerns model and proposing that the migration opportunity as an incentive mechanism is unreliable. In addition, we show that when an individual forms two types of human capital, increased migration opportunity for one type has a negative effect on the formation of the other type. The economic benefit and full policy implications of the findings were not addressed in this paper.

Abstract:We show the effects of labour market integration on consumers. Labour market integration allows the firms in the labour recipient countries to hire skilled and unskilled workers at lower wages. If labour market integration creates the possibility of migration of skilled workers, it increases investments in innovation and benefits the consumers. However, if labour market integration creates the possibility of migration of unskilled workers, it neither increases investment in innovation nor benefits the consumers always. Our results suggest that the effects of labour market integration on the consumers depend on several factors such as the market size, differences in the labour coefficients and wage and the type of migrated workers (i.e., skilled or unskilled workers).