Post 2015: Global Action for an Inclusive and Sustainable Future

Macro-economic impact
International labour migration also has macroeconomic
effects on the sending countries, with
further potential to reduce poverty through
multiplier effects. three factors affect the balance of
migration and development at the macroeconomic
level: (a) the impact of remittances on the economy;
(b) the impact of international migration on
productivity in the domestic economy; and (c) the
impact of migration on domestic labour supply
(Iom, 2008: 330).
Empirical findings on the impact of remittances
on GDP growth are highly mixed (catrinescu
et al., 2009; chami et al., 2003). the impacts are
ambiguous because remittances can be spent
on consumption without leading to economic
transformation, may reduce the pressure on
governments to improve policies and institutions,
increase inflationary pressures or create effects
similar to the Dutch disease 131 (Ebeke, 2012; pandey
et al., 2012; ratha et al., 2011b). on the other hand,
remittances can provide capital for businesses and
enterprises (Woodruff and Zenteno, 2007), reduce
the number of working poor (combes et al., 2011),
promote global financial development (Gupta et
al. 2007; aggrawal et al., 2006; ma and pozo, 2012)
and improve capital allocation (Giuliano and ruizarranz,
2009). many research findings confirm
that the economic conditions and institutional
settings influence how remittances are used and
their overall impact. the influence of institutions in
channelling remittances as a key source of income
and thus potential investment ‘is as instrumental as
it is in terms of the impact of trade, FDI and other
forms of investment’ (catrinescu et al., 2009:82).
recent evidence suggests that remittances are
associated with larger tax revenues due to increased
consumption. In combination with positive effects
on the possibility of sovereign borrowing from
capital markets, this may enable governments to
expand. Higher tax revenues are more likely than
oDa to lead to sustainable growth in the public
sector (Singer, 2012). Since remittances do not
directly expand production capacity, however, and
against the background of mixed results on GDp
growth, it is not certain that remittances provide a
sustainable source of finance for the expansion of
the public sector. nor can it be assumed that taxdriven
expansion benefits society as a whole.
the costs and benefits of international labour
migration and remittances can change the incentive
structures and motivations of key actors and
stakeholders in relation to political accountability
and corruption. Yet their effect on corruption and
governance is disputed (tyburski, 2012; abdih et
al., 2010; Grabel, 2008) and may depend on existing
governance structures and conditions (Ebeke,
2012).
Effect on labour markets
labour markets and wages in migrant-sending
countries can be affected by labour migration in two
ways: directly through changes in labour supply and
indirectly through remittances. First, in a simple
economic labour supply–demand framework, the
drop in labour supply resulting from migration
should lead to an increase in wages. Empirical
evidence from poland, where there was considerable
emigration of mainly mid-level to higher-skilled
workers between 1998 and 2007, shows an increase
in average wages of non-migrants. Disaggregated
results reveal, however, that the impact on wages
of non-migrant low-skilled workers was slightly
negative (Dustman et al., 2012). there have been
similar observations in Honduras (Gagnon, 2011)
and in nepal, where high levels of migration and
a shortage of agricultural workers have led to an
increase in agricultural wages compared to other
sectors (pandey et al., 2012:24).
131 this describes real exchange-rate appreciation through high levels of capital inflows leading to resource movements that favour the non-tradable
sector at the expense of tradable goods, which may result in loss of export competitiveness and a growing trade deficit.
poSt-2015: Global actIon For an IncluSIvE anD SuStaInablE FuturE
Recent evidence
suggests that
remittances are
associated with
larger tax revenues
due to increased
consumption. In
combination with
positive effects on
the possibility
of sovereign
borrowing from
capital markets,
this may enable
governments to
expand. Higher tax
revenues are more
likely than ODA to
lead to sustainable
growth in the
public sector.
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