Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica

Econometric analysis established a negative relationship between labor supply and remittances in Jamaica. We incorporate this ex-post evidence in a general equilibrium model to investigate economy-wide effects of increased remittance inflows. In this model, remittances reduce labor force participati...

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Bibliographic Details
Main Authors: Bussolo, Maurizio, Medvedev, Denis
Format: Journal Article
Language:EN
Published: 2012
Subjects:
Online Access:http://hdl.handle.net/10986/5474
id okr-10986-5474
recordtype oai_dc
spelling okr-10986-54742021-04-23T14:02:22Z Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica Bussolo, Maurizio Medvedev, Denis Remittances F240 Foreign Exchange F310 International Linkages to Development Role of International Organizations O190 Econometric analysis established a negative relationship between labor supply and remittances in Jamaica. We incorporate this ex-post evidence in a general equilibrium model to investigate economy-wide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, we show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially worrisome effects of remittances. 2012-03-30T07:33:00Z 2012-03-30T07:33:00Z 2008 Journal Article Journal of Economic Integration 1225651X http://hdl.handle.net/10986/5474 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article Jamaica
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language EN
topic Remittances F240
Foreign Exchange F310
International Linkages to Development
Role of International Organizations O190
spellingShingle Remittances F240
Foreign Exchange F310
International Linkages to Development
Role of International Organizations O190
Bussolo, Maurizio
Medvedev, Denis
Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
geographic_facet Jamaica
relation http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description Econometric analysis established a negative relationship between labor supply and remittances in Jamaica. We incorporate this ex-post evidence in a general equilibrium model to investigate economy-wide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, we show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially worrisome effects of remittances.
format Journal Article
author Bussolo, Maurizio
Medvedev, Denis
author_facet Bussolo, Maurizio
Medvedev, Denis
author_sort Bussolo, Maurizio
title Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
title_short Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
title_full Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
title_fullStr Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
title_full_unstemmed Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
title_sort do remittances have a flip side? a general equilibrium analysis of remittances, labor supply responses and policy options for jamaica
publishDate 2012
url http://hdl.handle.net/10986/5474
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