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Social Science > Emigration and Immigration

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Cover IMF Working Papers
Migration, Search and Skill Heterogeneity
Myrto Oikonomou
Cross-border migration can act as an important adjustment mechanism to country-specific shocks. Yet, depending on who moves, it can have unintended consequences for business cycle stability. This paper argues that the skill composition of migration plays a critical role. When migration flows become more concentrated in skilled labor an important trade-off arises. On the one hand, migration releases unemployment pressures for the origin countries. On the other hand, it generates negative compositional effects (the so-called “brain drain” effects) and skill imbalances, which reduce supply capacity in origin countries. This paper analyses quantitatively the impact of cyclical migration in an open-economy Dynamic Stochastic General Equilibrium (DSGE) model with endogenous migration flows, trade linkages, search and matching frictions, and skill heterogeneity. I apply this framework to the case of the Greek emigration wave following the European Debt Crisis. What I find is that emigration flows implied strong negative effects for capital formation, leading to more than a 15 percentage point drop in investment. Rather than stabilizing the Greek business cycle, labor mobility led to a deeper and more protracted recession.
Keywords:
Migration; Matching Frictions; Skill Heterogeneity; emigration flow; cross-border migration; net emigration; risk-premium shock; Labor markets; Labor market frictions; Skilled labor; Labor mobility; Southern Europe
Cover IMF Working Papers
Remittances and Vulnerability in Developing Countries
Giulia Bettin
,
Mr. Andrea F Presbitero
, and
Mr. Nikola Spatafora
This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. We exploit a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 107 developing countries over the period 2005-2011. We find that remittances are negatively correlated with the business cycle in recipient countries, and increase in response to adverse exogenous shocks, such as natural disasters or large declines in the terms of trade. Remittances are positively correlated with economic conditions in the source province. Nevertheless, in the presence of similar negative shocks to both source and recipient economies, remittances remain counter-cyclical with respect to the recipient country.
Keywords:
WP; remittance corridor; bilateral remittance; remittances outflow; transfer cost; remittance inflow; Remittances; Shocks; Business cycle; Vulnerability; Gravity model; Migration; Financial sector development; Business cycles; Global financial crisis of 2008-2009; Global