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:	Remittances F240 Foreign Exchange F310 International Linkages to Development Role of International Organizations O190
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
_version_	1764395182146453504

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

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