Overseas Employment and Remittances to a Dual Economy

Posted: 8 Nov 1999

See all articles by Barry McCormick

Barry McCormick

IZA Institute of Labor Economics

Jackline Wahba

University of Southampton, Department of Economics; IZA Institute of Labor Economics

Abstract

Overseas employment has become more commonplace, and the remittances have increased in similar proportions. For poor countries, remittances often substantially influence domestic expenditures and real exchange rates. We study overseas employment, remittances and domestic underemployment in a simple general equilibrium model with a non-traded good and minimum wage. The influence of population growth, rural productivity, and family altruism are examined. If remittances per migrant exceed domestic productivity then multiple equilibria may occur exhibiting high or low overseas employment. We discuss how the equilibrium with highest overseas employment conditionally Pareto dominates the other equilibria, and analyse policy co-ordination.

JEL Classification: F22, J61, O10, O53, R23

Suggested Citation

McCormick, Barry and Wahba, Jackline, Overseas Employment and Remittances to a Dual Economy. Available at SSRN: https://ssrn.com/abstract=190209

Barry McCormick

IZA Institute of Labor Economics ( email )

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Jackline Wahba (Contact Author)

University of Southampton, Department of Economics ( email )

Southampton, SO171BJ
United Kingdom
+44 23 8059 3996 (Phone)

HOME PAGE: http://https://sites.google.com/site/jackiewahba/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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