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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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 |
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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 |