Worker Remittances and Growth: The Physical and Human Capital Channels

Ziesemer, Thomas (2006). Worker Remittances and Growth: The Physical and Human Capital Channels. UNU-MERIT.

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  • Author Ziesemer, Thomas
    Title Worker Remittances and Growth: The Physical and Human Capital Channels
    Publication Date 2006
    Publisher UNU-MERIT
    Abstract Remittances may have an impact on economic growth through channels to physical and human capital. We estimate two variants of an open economy model of these two channels consisting of seven equations using the general method of moments with heteroscedasticity and autocorrelation correction (GMM-HAC) with pooled data for four different samples of countries receiving remittances in 2003. The countries with per capita income below $1200 benefit most from remittances in the long run because they have the largest impact of remittances on savings. Their remittances account for about 2% of the steady-state level of GDP per capita when compared to the counterfactual of having no remittances. Their ratio of the steady-state growth rates with and without remittances is 1.39. Transitional gains are higher than the steady-state gains only for the human capital variables of this sample. As savings react much more strongly than investment an important benefit of remittances is that less debt is incurred and less debt service is paid than without remittances. The elasticity of the GNI/GDP ratio with respect to the remittance/GDP ratio is .002. All effects are much weaker for the richer countries. JEL class.: O15, J61, C33.
    Keyword Remittances
    Growth
    Simultaneous equation model
    Copyright Holder UNU-MERIT
    Copyright Year 2006
    ISSN 1871-9872
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    Created: Wed, 11 Dec 2013, 16:07:07 JST