Remittances and inequality: A dynamic migration model

I. Ling Shen, Frédéric Docquier, Hillel Rapoport

Research output: Contribution to journalArticlepeer-review

35 Scopus citations

Abstract

We develop a model to study the effects of migration and remittances on inequality in the origin communities. While wealth inequality is shown to be monotonically reduced along the time-span, the short- and the long-run impacts on income inequality may be of opposite signs, suggesting that the dynamic relationship between migration/remittances and inequality may well be characterized by an inverse U-shaped pattern. This is consistent with the findings of the empirical literature, yet offers a different interpretation from the usually assumed migration network effects. With no need to endogenize migration costs through the role of migration networks, we generate the same results via intergenerational wealth accumulation.

Original languageEnglish
Pages (from-to)197-220
Number of pages24
JournalJournal of Economic Inequality
Volume8
Issue number2
DOIs
StatePublished - Jun 2010

Bibliographical note

Funding Information:
Acknowledgements The authors would like to express their gratitude to two anonymous referees for their valuable comments and suggestions. They also thank the participants at the 2003 Meeting of the European Economic Association in Venice, the XVIII Villa Mondragone International Economic Seminar, the NAKE Research Day 2006 in Amsterdam, the 2006 All China Economics International Conference and various seminar audiences. Frédéric Docquier and I-Ling Shen acknowledge financial support from the Belgian Federal Government (PAI grant P6/07, “Economic Policy and Finance in the Global Economy: Equilibrium Analysis and Social Evaluation”) and from the Belgian French-speaking community (Grant ARC 03/08-302 “New Macroeconomic Approaches to the Development Problem”). Hillel Rapoport acknowledges support from the Adar Fund.

Keywords

  • Inequality
  • Migration
  • Remittances

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