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Internal Migration, Remittances and Economic Development

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  • Xiameng Pan
  • Chang Sun

Abstract

We develop a quantitative spatial equilibrium model with endogenous migration and remittance decisions within households to examine the joint effect of migration and remittances on economic development. We apply the model to internal migration in China. Counterfactual analysis of the calibrated model shows that the presence of remittances increases migration and welfare, reduces regional inequality and facilitates structural change. Compared to a conventional single-person migration model, our household model suggests a larger reduction in regional inequality and stronger reallocation of employment from agriculture to manufacturing and services in response to the decline in migration costs over the period of 2000 to 2010.

Suggested Citation

  • Xiameng Pan & Chang Sun, 2023. "Internal Migration, Remittances and Economic Development," CESifo Working Paper Series 10623, CESifo.
    • Handle: RePEc:ces:ceswps:_10623
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    More about this item

    Keywords

    remittances; migration; structural change; spatial equilibrium;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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