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

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

Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance in...

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Bibliographic Details
Main Authors:	Bussolo, Maurizio, Medvedev, Denis
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGGREGATE EMPLOYMENT AGGREGATE LEVEL AGRICULTURE AVERAGE ANNUAL GROWTH AVERAGE WAGES BARGAINING POWER BARRIERS TO ENTRY BENCHMARK BLACK MARKET BUDGET CONSTRAINTS CHANGE IN LABOR SUPPLY COMMERCE COMPETITIVENESS CONSUMER PRICE CONSUMER PRICE INFLATION CONSUMERS CONSUMPTION DEMAND CONSUMPTION GOODS CURRENT ACCOUNT DEFICIT DEBT DEMAND FUNCTION DEMAND FUNCTIONS DISPOSABLE INCOME DISTRIBUTION OF REMITTANCES DOMESTIC MARKET DOWNWARD PRESSURE DYNAMIC ADJUSTMENT ECONOMETRIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EFFECTS OF REMITTANCES ELASTICITY EMPLOYEE EMPLOYMENT LEVEL EMPLOYMENT LIKELIHOOD EQUILIBRIUM EQUILIBRIUM LEVEL EQUILIBRIUM PRICES EVOLUTION OF REMITTANCES EXCHANGE RATE EXPENDITURE EXPENDITURES EXPORTS FACTOR DEMAND FACTOR PRICES FACTOR RETURNS FEMALE FAMILY MEMBERS FEMALE LABOR FEMALE LABOR FORCE FIRING COST FIRING COSTS FISCAL POLICY FLOWS OF REMITTANCES GDP GENERAL EQUILIBRIUM ANALYSIS GOVERNMENT EXPENDITURE GROWTH RATE GROWTH RATES HIGH UNEMPLOYMENT HIGH UNEMPLOYMENT RATE HIGH UNEMPLOYMENT RATES HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME HOUSEHOLD SURVEYS HUMAN CAPITAL IMPACT OF REMITTANCES IMPORTANCE OF REMITTANCES INCOME DISTRIBUTION INCOME EFFECT INCOME ELASTICITIES INCOME TAXES INCOMES INCREASE IN LABOR INCREASE IN REMITTANCES INDUSTRIAL RELATIONS INFLATION INFLATION RATES INTEREST RATES INTERNATIONAL MARKETS INTERNATIONAL REMITTANCE INTERNATIONAL REMITTANCES INTERNATIONAL TRADE JOB MARKET JOB OFFERS JOB SECURITY LABOR COSTS LABOR DEMAND LABOR FORCE LABOR FORCE PARTICIPATION LABOR MARKET LABOR MARKET PERFORMANCE LABOR MARKET REGULATIONS LABOR MARKET RIGIDITY LABOR MARKETS LABOR SUPPLY LABOR UNION LABOR UNIONS MACROECONOMIC EFFECTS MACROECONOMIC RESULTS MARKET CONDITIONS MERCHANDISE MERCHANDISE EXPORTS MERCHANDISE IMPORTS MIGRANTS MINIMUM WAGE MINIMUM WAGES MONETARY POLICY NON-WAGE COSTS NORMAL GOOD OPEN ECONOMY OPPORTUNITY COST PAYROLL TAX PAYROLL TAXES PRELIMINARY ANALYSIS PRICE CHANGE PRICE INCREASE PRIVATE SERVICES PRODUCER PRICES PRODUCTION INCREASES PROTECTIONISM PUBLIC SECTOR EMPLOYMENT PUBLIC SERVICES REAL GDP REAL WAGES RECIPIENT COUNTRIES RECIPIENT HOUSEHOLDS RELATIVE PRICES REMITTANCE REMITTANCE FLOWS REMITTANCE IMPACT REMITTANCE INFLOWS REMITTANCE RECEIPTS REMITTANCES SALES SAVINGS SERVICE SECTORS SEVERANCE PAYMENTS SMALL MANUFACTURING SPREAD SUBSTITUTION SUBSTITUTION EFFECT SUPPLY CURVE SUPPLY EQUATION SUPPLY FUNCTION TAX REVENUES TAXATION TOTAL WAGE TRADE BALANCE TRANSFER MONEY TRINIDAD AND TOBAGO UNEMPLOYED UNSKILLED LABOR UNSKILLED WORKERS UTILITY FUNCTION VALUE ADDED VOLATILITY VOLUME OF REMITTANCES WAGE GROWTH WAGE RATE WORKER WORKERS WORKING CONDITIONS
Online Access:	http://documents.worldbank.org/curated/en/2007/03/7405821/remittances-flip-side-general-equilibrium-analysis-remittances-labor-supply-responses-policy-options-jamaica http://hdl.handle.net/10986/7159

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Summary:	Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing the 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, the authors show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially negative effects of remittances.

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

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