Immigration Policy, Remittances, and Growth in the Migrant-Sending Country
CIRPEE Working Paper 09-15
35 Pages Posted: 14 May 2009
Date Written: May 14, 2009
As evidence accumulates to expose the ineffectiveness of foreign aid, there are increasing calls for rich countries to open up their immigration policies so as to enable migrants' remittances to substitute for foreign aid as a growth-stimulant in poor, migrant-sending countries. In this paper, we use an endogenous growth model to argue that the growth effects of transnational migration and remittances are entirely mediated by the human capital profile of emigrants, as determined by immigration policy at the destination country. Quantitatively we find that when immigration policy at the destination country provokes a "brain drain", growth is negatively impacted in the sending country despite remittances. The reverse is true when immigration policy targets workers with low levels of human capital.
Keywords: Remittances, migration, growth, education, general equilibrium, child labor
JEL Classification: J13, J61, O11, O15, O40
Suggested Citation: Suggested Citation