THE EFFECT OF REMITTANCES UPON SKILLED EMIGRATION: AN EMPIRICAL STUDY

Abstract

This paper empirically examines whether remittance inflows affect emigration. We consider a panel of 133 developing countries as migrant source countries and seven five-year windows between 1980 and 2010. Because inflows of remittances could be endogenous, we employ a dynamic GMM estimation methodology. We find that inflows of remittances are positively associated with subsequent stocks of highly educated migrants living in OECD countries. We find little association between remittance inflows and subsequent changes in stocks of less educated migrants. Although many see the level of migration as influencing remittance flows, our results suggest that causality goes in the other direction as well, implying that the inflow of remittances could be a push-factor for emigration, at least for those with more education.