Why Don't Remittances Appear to Affect Growth?
By Michael A. Clemens, David J. McKenzie. 2014
150 citations recorded by the source corpus.
Although measured remittances by migrant workers have soared in recent years, macroeconomic studies have difficulty detecting their effect on economic growth. This paper reviews existing explanations for this puzzle and proposes three new ones. First, it offers evidence that a large majority of the recent rise in measured remittances may be illusory -- arising from changes in measurement, not changes in real financial flows. Second, it shows that even if these increases were correctly measured, cross-country regressions would have too little power to detect their effects on growth. Third, it points out that the greatest driver of rising remittances is rising migration, which has an opportunity cost to economic product at the origin. Net of that cost, there is little reason to expect large growth effects of remittances in the origin economy. Migration and remittances clearly have first-order effects on poverty at the origin, on the welfare of migrants and their families, and on global gross domestic product; but detecting their effects on growth of the origin economy is likely to remain elusive.
Subfields: Economics and Econometrics, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/88d0b1b76618eefacf001ca7e00ded03db71d1bd
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
Citations in the corpus
- The impact of climate change on incomes and convergence in Africa (2020, background): “The literature on the effects of remittances on economic growth produces results both in favour and disfavour of remittances as a driver of economic growth (Catrinescu, Leon-Ledesma, Piracha, & Quillin, 2009; Clemens & Mckenzie, 2014).”