Do Remittances Have a Flip Side?
Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses and Policy Options for Jamaica
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제23권 제3호
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2008.09734 - 764 (31 pages)
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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 importcompeting 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.
Ⅰ. Introduction
Ⅱ. Remittances and Labor Markets in Jamaica
Ⅲ. General Equilibrium Approach: Advantages, Model Description, and Key Data
Ⅳ. Remittances, Labor Supply, and the Jamaican Economy: A Numerical Analysis of Their Interdependence and an Assessment of Policy Options
Ⅴ. Conclusions
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