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The impacts of rural–urban migrants’ remittances on the urban economy

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  • Xiaochun Li
  • Dianshuang Wang

Abstract

Much literature finds that migrants’ remittances have positive effects on the labor-outsourcing regions; however, it should be noted that the massive funds outflow from the labor host regions poses an impact on these regions as well. Moreover, the existing literature sheds little light on the theoretical study of remittances within one economy. This article theoretically analyzes the economic impact of migrants’ remittances on the labor host regions, the urban regions, and establishes a three-sector general equilibrium model to investigate the impacts of an increase in remittances on wage, employment and welfare level in the urban regions from the short- and long-term perspectives. We find that an increase in remittances will reduce the output of the informal sector and decrease urban residents’ welfare in the short term, while it will increase the output of the informal sector and augment urban residents’ welfare in the long term. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Xiaochun Li & Dianshuang Wang, 2015. "The impacts of rural–urban migrants’ remittances on the urban economy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 591-603, March.
    • Handle: RePEc:spr:anresc:v:54:y:2015:i:2:p:591-603
    DOI: 10.1007/s00168-015-0668-y
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    References listed on IDEAS

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    1. Chaudhuri, Sarbajit, 2007. "Foreign capital, welfare and urban unemployment in the presence of agricultural dualism," Japan and the World Economy, Elsevier, vol. 19(2), pages 149-165, March.
    2. Xiaochun Li & Xiaoying Qian, 2011. "Economic Analysis On The Urban–Rural Disparity In Human Capital In China," South African Journal of Economics, Economic Society of South Africa, vol. 79(2), pages 146-160, June.
    3. Shigemi Yabuuchi & Hamid Beladi, 2001. "Urban unemployment, informal sector and development policies," Journal of Economics, Springer, vol. 74(3), pages 301-314, October.
    4. Djajic, Slobodan, 1998. "Emigration and welfare in an economy with foreign capital," Journal of Development Economics, Elsevier, vol. 56(2), pages 433-445, August.
    5. Chinmay, Tumbe, 2011. "Remittances in India: Facts and Issues," MPRA Paper 29983, University Library of Munich, Germany.
    6. Quibria, M G, 1997. "International Migration, Remittances and Income Distribution in the," Bulletin of Economic Research, Wiley Blackwell, vol. 49(1), pages 29-46, January.
    7. Gupta, Manash Ranjan, 1997. "Informal sector and informal capital market in a small open less-developed economy," Journal of Development Economics, Elsevier, vol. 52(2), pages 409-428, April.
    8. Li, Xiaochun & Zhou, Yu, 2013. "An economic analysis of remittance of unskilled migration on skilled–unskilled wage inequality in labor host region," Economic Modelling, Elsevier, vol. 33(C), pages 428-432.
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    Cited by:

    1. Yunyun Wu & Xiaochun Li, 2020. "Rural-urban migrants' remittances and wage inequality: Evidence from China," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(3), pages 129-139.

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    More about this item

    Keywords

    E24; O18; R23; I31;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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