Are Remittances Good for Labor Markets in LICs, MICs and Fragile States?

Abstract

We present crosscountry evidence on the impact of remittances on labor market outcomes. Remittances appear to have a strong impact on both labor supply and labor demand in recipient countries. These effects are highly significant and greater in size than those of foreign direct investment or offcial development aid. On the supply side, remittances reduce labor force participation and increase informality of the labor market. In addition, male and female labor supply show significantly different sensitivities to remittances. On the demand side, remittances reduce overall unemployment but benefit mostly lower-wage, lowerproductivity nontradables industries at the expense of high-productivity, high-wage tradables sectors. As a consequence, even though inequality declines as a result of larger remittances, average wage and productivity growth declines, the latter more strongly than the former leading to an increase in the labor income share. In fragile states, in contrast, remittances impose a positive externality, possibly because the tradables sector tends to be underdeveloped. Our findings indicate that reforms to foster inclusive growth need to take into account the role of remittances in order to be successful.

Do Remittances Enhance Financial Inclusion in LMICs and in Fragile States?

“…In order to analyze the regional features of the relationship workers' remittances and financial inclusion, we follow Chami et al (2018) , and use the approach that removes each region at a time and we calculate the difference between the coefficients of remittances in the LMICs sample (Columns 1, 3, 5, 7 and 9 in Table 7) and the one in the reduced sample. The specified regions are South Asia (SA), Middle East and North Africa (MENA), East Asia and Pacific (EAP), Sub Saharan African countries (SSA) and Latin America & Caribbean (LAC).…”

“…The increasing importance of remittances has raised interest in studying their development impact. The contributions span several dimensions, including growth (Chami et al, 2015, among others), 2 poverty (Adams, 2004 and2006;Acosta et al, 2007, among others), education (Yang, 2008;Adams and Cuecuecha, 2010;and Bredl, 2011), labor supply (Kim, 2007;Rodriguez and Tiongson, 2011;Chami et al, 2018); health (De and Ratha, 2012), and entrepreneurship (Amuedo-Dorantes and Pozo, 2006;Yang, 2008).…”

International migrant remittances and labour force participation in Nigeria

“…Similar results were obtained by Emilsson (2011) in Jordan using the probit regression technique, Justino and Shemyakan (2012) for Tajikistan using ordinary least squares and Tobit model, and Khan and Valatheeswaran (2016) for India using the instrumental variable approach. In addition, Chami, Ernst, Fullenkamp, and Oeking (2018) applied the generalized method of moments and obtained similar evidence in selected fragile states as well as low and middle‐income countries.…”

Migrant Remittances and Economic Growth: The Role of Financial Efficiency

“…[12] shows that migrant remittances reduce the female labour force participation rate but do not affect the male participation rate. Furthermore, [13] shows that remittances have a significant impact on both the demand and supply of labour in recipient countries. On the labour supply side, remittances reduce labour force participation and increase the informal sector of the labour market.…”