European Business Schools Librarian's Group
ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School
No DR 09002: Migratory equilibria with invested remittances
Claire Naiditch () and Radu Vranceanu ()
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Claire Naiditch: Ecole doctorale d'Economie Panthéon Sorbonne, Postal: ECOLE DOCTORALE D'ECONOMIE PANTHEON-SORBONNE, Maison des Sciences Economiques, 106-112 Bd. de l'Hôpital, 75647 PARIS Cedex 13, FRANCE
Radu Vranceanu: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 50105, 95021 CERGY-PONTOISE Cedex , FRANCE, ,
Abstract: This paper analyzes international migrations when migrants invest part of their income in their origin country. This investment contributes to increase capital intensity and wages in the origin country, thus reducing the scope for migrating. We show that a non-total migratory equilibrium can exist if the foreign wage is not too high, and/or migratory and transfer costs are not too low. Exogenous shocks, such as an increase in the foreign wage, lead to an increase in optimal remittances per migrant, and a higher wage in the origin country. Yet the net effect on the equilibrium number of migrants is positive. Hence, in equilibrium, optimal remittances and number of migrants are positively related. We use data from twenty five countries from Eastern Europe and Central Asia in 2000 in order to test for this implication of our model. OLS and bootstrap estimates put forward a positive elasticity of the number of migrants with respect to remittances per migrant. Policy implications follow.
Keywords: Investment motive; Migration; Migratory policy; Remittances
46 pages, April 2009
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