Open economy macroeconomic models generally overlook the effects ofinternational migration and remittances on income and welfare. Atwocountry temporary equilibrium model is presented which incorporatestrade theoretic elements of international migration and remittances. Inthe model, an expansionary incomes, or a trade, policy by the hostcountry induces migration, while expansionary demand policies in thesource country discourage migration. In all cases, however, when somedegree of international migration exists, potential income and welfaregains to both countries induced by such policies exceed the equivalentpolicy gains where international migration and remittances are absent.
Journal of Economic Studies – Emerald Publishing
Published: Feb 1, 1991