The flow of workers' remittances to Pakistan has more than quadrupled in the last eight years and it shows no sign of slowing down, despite the economic downturn in the Gulf Cooperation Council (GCC) and other important host countries for Pakistani workers. This paper analyses the forces that have driven remittance flows to Pakistan in recent years. The main conclusions are: (i) the growth in the inflow of workers' remittances to Pakistan is in large part due to an increase in worker migration; (ii) higher skill levels of migrating workers have helped to boost remittances; (iii) other imporant determinants of remittances to Pakistan are agriculture output and the relative yield on investments in the host and home countries.
In flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective, this paper presents an econometric analysis of the influence of labor market flows on wage formation as an alternative to the traditional specification of wage equations in which unemployment represents Phillips-curve or wage-curve effects. The paper estimates a dynamic wage equation for the Netherlands using a cointegration approach. It finds that labor flows, and notably flows from outside the labor market, are important determinants of both short-run and long-run wage setting.
JEL classification codes: J31, C51
The flow of workers’ remittances to Pakistan has more than
quadrupled in the last eight years and shows no sign of slowing down,
despite the economic downturn in the Gulf Cooperation Council and other
important host countries for Pakistani workers. This paper analyses the
forces that have driven remittance flows to Pakistan in recent years. A
methodological innovation is that we study the behaviour of per capita
remittances and draw a close link between remittances and remitters’
earning capacity, in the belief that higher earning power leads to more
remittances. Our main conclusions are that (i) the growth in the inflow
of workers’ remittances to Pakistan is in large part due to an increase
in worker migration, (ii) the higher skill levels of migrating workers
has helped boost remittances, and (iii) other imporant determinants of
remittances to Pakistan are agricultural output and the relative yield
on investments in the host and home countries. JEL classification: F22,
F24 Keywords: Workers’ Remittances, Migration, Pakistan
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