Pablo Acosta

Remittances and the Dutch Disease

Using data for El Salvador and Bayesian techniques, we develop and estimate a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances in emerging market economies. We focus our study on whether rising levels of remittances result in the Dutch disease phenomenon in recipient economies. We find that, whether altruistically motivated or otherwise, an increase in remittances flows leads to a decline in labor supply and an increase in consumption demand that is biased toward nontradables. The increase in demand for nontradables, coupled with higher production costs, results in an increase in the relative price of nontradables, which further causes the real exchange rate to appreciate. The higher nontradable prices serve as an incentive for an expansion of that sector, culminating in reallocation of labor away from the tradable sector. This resource reallocation effect eventually causes a contraction of the tradable sector. A vector autoregression analysis provides results that are consistent with the dynamics of the model.

The impact of remittances on poverty and human capital : evidence from Latin American household surveys

This paper explores the impact of remittances on poverty, education, and health in 11 Latin American countries using nationally representative household surveys and making an explicit attempt to account for one of the inherent costs associated with migration-the potential income that the migrant may have made at home. The main findings of the study are the following: (1) regardless of the counterfactual used remittances appear to lower poverty levels in most recipient countries; (2) yet despite this general tendency, the estimated impacts tend to be modest; and (3) there is significant country heterogeneity in the poverty reduction impact of remittances flows. Among the aspects that have been identified in the paper that may lead to varying outcomes across countries are the percentage of households reporting remittances income, the share of remittances of recipient households belonging to the lowest quintiles of the income distribution, and the relative importance of remittances flows with respect to GDP. While remittances tend to have positive effects on education and health, this impact is often restricted to specific groups of the population.

Labor supply, school attendance, and remittances from international migration: the case of El Salvador

The objective of this paper is to present microeconomic evidence on the economic effects of international remittances on households spending decisions. Remittances can increase the household budget and reduce liquidity constraint problems, allowing more consumption and investment. In particular, remittances can afford investing in childrens human capital, a key outcome for the discussion of the perspective of growth in a high recipient developing country. Robust estimates that take into account both selection and endogeneity problems in estimating an average impact of remittances are substantially different from least squares (OLS) estimates presented in previous studies, indicating the importance of dealing with these methodological concerns. After controlling for household wealth and using selection correction techniques such as propensity score matching as well as village and household networks as instruments for remittances receipts, average estimates suggest that girls and young boys (less than 14 years old) from recipient households seem to be more likely to be enrolled at school than those from nonrecipient households. Remittances are also negatively related to child labor and adult female labor supply, while adult male labor force participation remains unaffected on average. The results signaling that the additional income derived from migration increases girls education and reduces womens labor supply, with no major impact on activity choice for males 14 years or older, suggest the presence of gender differences in the use of remittances across (and possibly, within) households.

Remittances, Exchange Rate Regimes, and the Dutch Disease: A Panel Data Analysis

Using disaggregated sectorial data, this study shows that rising levels of remittances have spending effects that lead to real exchange rate appreciation and resource movement effects that favor the nontradable sector at the expense of tradable goods production. These characteristics are two aspects of the phenomenon known as Dutch disease. The results further indicate that these effects operate more strongly under fixed nominal exchange rate regimes.

Remittances and Development in Latin America

Flows of workers remittances have become a major source of external finance for developing countries and are particularly important in Latin America and the Caribbean, where they are estimated to have reached

School Attendance, Child Labour, and Remittances from International Migration in El Salvador

40 billion in 2004. Not surprisingly, academics, policymakers and development practitioners in general have been devoting increasing attention to the potential development impact that these flows may have on receiving countries. This paper contributes to this debate along four dimensions. First, it reviews the evolution of remittances flows to Latin America, using Balance of Payments data, and compares these statistics with estimates of remittances income based on Household Surveys. Second, the paper describes the varying profile of remittances recipients in ten Latin American countries. Third, the paper reviews the few macro- and microeconomic studies that have estimated the impact of remittances on poverty and inequality. Finally, the paper expands some of the existing works to investigate the extent to which that impact is different in Latin America and varies across countries in the region. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd.

Capital Accumulation, Trade Liberalization, and Rising Wage Inequality: The Case of Argentina

Abstractn International migrant remittances can increase household budget and reduce liquidity constraint problems, generating consumption and investment opportunities for recipient households. In particular, remittances can enable investing in childrens human capital and reduce child labour, key outcomes from the perspective of growth in a developing country. Using data for El Salvador, this article shows: a) a null or insignificant overall impact of remittances on schooling; b) a strong reduction of child wage labour in remittance-recipient households; and c) an increase in unpaid family work activities for children in those households. Moreover, the evidence shows important differences by gender and age of the child in consideration. While girls seem to indeed increase school attendance upon remittance receipts by reducing labour activities, boys do not benefit on average from higher schooling but some time substitution takes place favouring family work activities over paid jobs. And among secondary school-aged children, the impact of remittance may even be negative for educational prospects. These results suggest the presence of differences in the allocation of resources within the household.

Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010

Capital accumulation can modify the relative productivity between skilled and unskilled workers, leading to changes in the wage structure. In particular, if capital goods are relatively more complementary to skilled workers, a positive correlation between investment in physical capital and the wage premium would be expected. In this article, we present evidence for this hypothesis by taking advantage of the variability in wage premia and capital investment across industries in Argentina’s manufacturing sector. We conclude that the wage premium for skilled workers increased more in those industries with higher investment in machinery and equipment. The overall evidence seems to indicate that industry affiliation is an important determinant of earnings differentials by skill group.

Trade Reform and Inequality: The Case of Mexico and Argentina in the 1990s

It has been argued that a factor behind the decline in income inequality in Latin America in the 2000s was the educational upgrading of its labor force. Between 1990 and 2010, the proportion of the labor force in the region with at least secondary education increased from 40 to 60 percent. Concurrently, returns to secondary education completion fell throughout the past two decades, while the 2000s saw a reversal in the increase in the returns to tertiary education experienced in the 1990s. This paper studies the evolution of wage differentials and the trends in the supply of workers by educational level for 16 Latin American countries between 1990 and 2000. The analysis estimates the relative contribution of supply and demand factors behind recent trends in skill premia for tertiary and secondary educated workers. Supply-side factors seem to have limited explanatory power relative to demand-side factors, and are only relevant to explain part of the fall in wage premia for high-school graduates. Although there is significant heterogeneity in individual country experiences, on average the trend reversal in labor demand in the 2000s can be partially attributed to the recent boom in commodity prices that could favor the unskilled (non-tertiary educated) workforce, although employment patterns by sector suggest that other within-sector forces are also at play, such as technological diffusion or skill mismatches that may reduce the labor productivity of highly-educated workers.

Monte Carlo properties of spatial dependence LM tests

This paper provides empirical assessments of one of the leading explanations for the increase in skill premium in Mexico and Argentina during the 1990s: trade liberalisation. We present evidence showing that imports increase skill premium in Mexico, while exports reduce it. In Argentina, trade increased skill premium in the early 1990s (the beginning of trade reforms), although it reduced it later in the decade. These results are helpful for a comparison between South-South integration, FTAA or bilateral FTAs with Northern economies as alternative trade policy options for Latin American countries. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd.