Abstract
A recursive system is employed to investigate the indirect effect of out-migration on gross domestic product (GDP) through remittances in South Asia, namely Bangladesh, India, Nepal, Pakistan, and Sri Lanka. Out-migration is further disaggregated by skill level and country of destination (Middle East and other), and their effects on GDP through remittances are examined. The results suggest that migration and remittances have an important significant effect on the GDP of the countries under study. Of the skill categories, the unskilled category has the largest robust indirect effect on GDP. The effects of migration on GDP by country of destination suggest that migration to the Middle East has a robust and significant impact on GDP. There is some evidence of a combination between the altruistic and self-interested motives of migrants’ to remit.
Appendix
Description of variables used in the study and data sources
| Series | Source |
| GDP data all countries | World Development Indicators (2011) |
| Total number of migrants all countries | Bangladesh: Bureau of Manpower, Employment and Training (BMET)http://www.bmet.org.bd/BMET/stattisticalDataAction India: Annual reports of the Ministry of Overseas Indian Affairs Pakistan: Wickramasekara (2002a, 2002b, 2010) Sri Lanka: Annual statistical reports Sri Lanka bureau of foreign employment Nepal: Wickramasekara (2010) |
| Number of migrants to the Middle East and other destinations | Bangladesh: Calculated from Bureau of Manpower, Employment and Training (BMET) India: Calculated from IOM report 2000, annual reports of the Ministry of Overseas Indian Affairs Pakistan: Calculated from IOM report 2000, Sri Lanka: Calculated from IOM report 2000, annual statistical reports of the Sri Lanka Bureau of foreign employment. |
| Number of migrants by skill level | Bangladesh: Bureau of Manpower, Employment and Training (BMET)http://www.bmet.org.bd/BMET/stattisticalDataAction India: Author’s own calculation up until 1998 from Sasikumar (2001), Khadria (2002) Pakistan: Ahmed, Sugiyarto, and Jha (2010). Sri Lanka: Annual statistical reports of the Sri Lanka bureau of foreign Employment. |
| Total remittances all countries US$ | World Bank (2011): migration and remittance database |
| Remittances from the Middle East and other destinations $US | Bangladesh: Bangladesh Bank (Central Bank of Bangladesh) http://www.bangladesh-bank.org India: Reserve Bank of India Bulletins Pakistan: Pakistan Bureau of Employment and Overseas Employmenthttp://www.beoe.gov.pk/Remittance.asp, State Bank of Pakistan Economic Datahttp://www.sbp.org.pk/ecodata/index2.asp Sri Lanka: annual statistical reports of the Sri Lanka bureau of foreign employment |
| Labour force all countries | World Development Indicators (2011) |
| M2 | World Development Indicators (2011) |
| Secondary enrolment ratio all countries | World Development Indicators (2011) |
| Openness all countries | World Development Indicators (2011) |
| Capital stock all countries | Authors own calculation |
| Inflation rate CPI (% annual) | World Development Indicators (2011) |
| Deposit rate (% annual) | World Development Indicators (2011) |
| Official exchange rate: local currency per US$ | World Development Indicators (2011) |
Descriptive statistics
| Variable | Observations | Mean | Standard deviation | Minimum | Maximum |
| Total migrants (number) | 158 | 185,542 | 169,578.3 | 500 | 875,055 |
| Migrants to the ME (number) | 127 | 171,953 | 148,858.4 | 495 | 825,310 |
| Migrants to other destinations (number) | 128 | 26,507 | 74,093 | 5 | 641,356 |
| Total remittances $US | 158 | 3.92E + 09 | 8.32E + 09 | 1.30E + 07 | 5.31E + 10 |
| Remittances from the ME $US | 101 | 1.91E + 09 | 2.04E + 09 | 5.90E + 07 | 1.10E + 10 |
| Remittances from other destinations $US | 101 | 2.58e + 09 | 6.39e + 09 | 6.93e + 07 | 3.90e + 10 |
| Professional migrants (number) | 115 | 10,374 | 17,956 | 262 | 73,202 |
| Other white collar migrants (number) | 80 | 11,772 | 8,758 | 336 | 33,173 |
| Skilled migrants (number) | 115 | 47,545 | 43,478 | 139 | 292,364 |
| Semi-skilled migrants (number) | 96 | 15,852 | 25,206 | 151 | 183,673 |
| Unskilled migrants (number) | 115 | 101,096 | 86,088 | 2,444 | 482,922 |
| Labour force (number) | 150 | 9.12e + 07 | 1.34e + 08 | 5,793,395 | 4.59e + 08 |
| M2 $US | 175 | 2.78e + 12 | 7.99e + 12 | 2.77e + 09 | 5.93e + 13 |
| Openness $US | 174 | 3.98e + 10 | 1.06e + 11 | 3.61e + 08 | 7.49e + 11 |
| Enrolment ratio (% gross) | 157 | 37.8 | 18.2 | 13.3 | 88.5 |
| Capital stock $US | 160 | 1.49e + 11 | 2.71e + 11 | 8.34e + 07 | 1.56e + 12 |
| Inflation CPI (annual %) | 164 | 8.42 | 4.44 | –3.11 | 26.14 |
| Deposit interest rate (%) | 104 | 9.75 | 3.88 | 1.63 | 19.79 |
| Official exchange rate (local currency per US$) | 175 | 40.60 | 25.92 | 7.86 | 114.94 |
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- 1
See de Haas (2007) for a survey of the literature.
- 2
Docquier and Marfouk (2005) use data on the immigration structure by educational attainment and country of birth from all OECD receiving countries to estimates of emigration stocks and rates by educational attainment. The present study in contrast investigates the effect of the skill level of the migrant on home country remittances and GDP.
- 3
See Khatri (2007) for a detailed discussion of measures taken and effects of labour migration in South Asia.
- 4
See Lucas and Stark (1985) for hypotheses on the motives to remit.
- 5
Rozelle, Taylor, and deBrauw (1999) have used a recursive system to estimate the effects of migration and remittances in China on agricultural production.
- 6
M, is further divided into two components: migration to the ME and the Gulf (
) and migration to other countries (
) and remittances, R, is also divided into: remittances from the ME (
), and remittances from other destinations (
). - 7
The definition of these migrant categories is as follows: (1) Professionals are those who are tertiary qualified for example, doctors, lawyers, and engineers. (2) Other white collar workers are those with secondary qualifications, for example, administrative and managerial staff (the highly skilled group in Pakistan, mid-level group in Sri Lanka and white collar workers in India fall into this group. Bangladesh does not have this category). (3) Those who fall into the skilled labour category are those who have received specialised training in particular trades, for example, plumbers, carpenters. (4) Someone who has knowledge of a particular job, but is not qualified or received specialised training, for example, tailors, masons fall into the semi-skilled category. (5) Workers with no qualifications or training, for example, housemaids, labourers fall into the unskilled group.
- 8
The level of GDP is also used by Lueth and Ruiz-Arranz (2008) and Niimi, Ozden, and Schiff (2010). Lueth and Ruiz-Arranz (2008) note that policymakers in sending countries are interested policies that promote remittances and how they affect GDP in the host country.
- 9
The total effect is the sum of the direct influence of the exogenous variable, M, on the endogenous variable R, plus the indirect effect of M on GDP through the mediating variable R. The indirect effect is calculated by multiplying the direct effects corresponding to the indirect effects.
- 10
For example, of the total, South Asian migrants residing in the United States, the majority were tertiary qualified. Of the total Bangladeshi, Indian, Pakistani, and Sri Lankan populations in the United States 62%, 80%, 67% and 72% respectively, had tertiary qualifications (Dodani and La Porte 2005).
©2014 by Walter de Gruyter Berlin / Boston
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Articles in the same Issue
- Frontmatter
- Advances
- Preferential Admission and MBA Outcomes: Mismatch Effects by Race and Gender
- Quantity Uncertainty and Demand: The Case of Water Smart Reader Ownership
- Contributions
- Employment Effects of the 2009 Minimum Wage Increase: New Evidence from State-Based Comparisons of Workers by Skill Level
- Introducing Carbon Taxes in Russia: The Relevance of Tax-Interaction Effects
- Estimating Parents’ Valuations of Class Size Reductions Using Attrition in the Tennessee STAR Experiment
- Local Option, Alcohol and Crime
- To Work or Not to Work? The Effect of Childcare Subsidies on the Labour Supply of Parents
- Understanding Ransom Kidnappings and Their Duration
- Screening Stringency in the Disability Insurance Program
- Sticks and Carrots in Procurement: An Experimental Exploration
- Peer Effects and Policy: The Relationship between Classroom Gender Composition and Student Achievement in Early Elementary School
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- Competition and Innovation in Product Quality: Theory and Evidence from Eastern Europe and Central Asia
- Trading the Television for a Textbook?: High School Exit Exams and Student Behavior
- The Effect of Parental Migration on the Educational Attainment of Their Left-Behind Children in Rural China
- Do Parents’ Social Skills Influence Their Children’s Sociability?
- The Role of Infrastructure in Mitigating Poverty Dynamics: The Case of an Irrigation Project in Sri Lanka
- Congestion of Academic Journals Under Papers’ Imperfect Selection
- Endogenous Merger with Learning
- Do Low-Skilled Migrants Contribute More to Home Country Income? Evidence from South Asia
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