Bussolo, MaurizioMedvedev, Denis2012-06-052012-06-052007-03https://hdl.handle.net/10986/7159Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing the reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, the authors show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially negative effects of remittances.CC BY 3.0 IGOAGGREGATE EMPLOYMENTAGGREGATE LEVELAGRICULTUREAVERAGE ANNUAL GROWTHAVERAGE WAGESBARGAINING POWERBARRIERS TO ENTRYBENCHMARKBLACK MARKETBUDGET CONSTRAINTSCHANGE IN LABOR SUPPLYCOMMERCECOMPETITIVENESSCONSUMER PRICECONSUMER PRICE INFLATIONCONSUMERSCONSUMPTION DEMANDCONSUMPTION GOODSCURRENT ACCOUNT DEFICITDEBTDEMAND FUNCTIONDEMAND FUNCTIONSDISPOSABLE INCOMEDISTRIBUTION OF REMITTANCESDOMESTIC MARKETDOWNWARD PRESSUREDYNAMIC ADJUSTMENTECONOMETRIC ANALYSISECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC PERFORMANCEEFFECTS OF REMITTANCESELASTICITYEMPLOYEEEMPLOYMENT LEVELEMPLOYMENT LIKELIHOODEQUILIBRIUMEQUILIBRIUM LEVELEQUILIBRIUM PRICESEVOLUTION OF REMITTANCESEXCHANGE RATEEXPENDITUREEXPENDITURESEXPORTSFACTOR DEMANDFACTOR PRICESFACTOR RETURNSFEMALE FAMILY MEMBERSFEMALE LABORFEMALE LABOR FORCEFIRING COSTFIRING COSTSFISCAL POLICYFLOWS OF REMITTANCESGDPGENERAL EQUILIBRIUM ANALYSISGOVERNMENT EXPENDITUREGROWTH RATEGROWTH RATESHIGH UNEMPLOYMENTHIGH UNEMPLOYMENT RATEHIGH UNEMPLOYMENT RATESHOUSEHOLD CONSUMPTIONHOUSEHOLD INCOMEHOUSEHOLD SURVEYSHUMAN CAPITALIMPACT OF REMITTANCESIMPORTANCE OF REMITTANCESINCOME DISTRIBUTIONINCOME EFFECTINCOME ELASTICITIESINCOME TAXESINCOMESINCREASE IN LABORINCREASE IN REMITTANCESINDUSTRIAL RELATIONSINFLATIONINFLATION RATESINTEREST RATESINTERNATIONAL MARKETSINTERNATIONAL REMITTANCEINTERNATIONAL REMITTANCESINTERNATIONAL TRADEJOB MARKETJOB OFFERSJOB SECURITYLABOR COSTSLABOR DEMANDLABOR FORCELABOR FORCE PARTICIPATIONLABOR MARKETLABOR MARKET PERFORMANCELABOR MARKET REGULATIONSLABOR MARKET RIGIDITYLABOR MARKETSLABOR SUPPLYLABOR UNIONLABOR UNIONSMACROECONOMIC EFFECTSMACROECONOMIC RESULTSMARKET CONDITIONSMERCHANDISEMERCHANDISE EXPORTSMERCHANDISE IMPORTSMIGRANTSMINIMUM WAGEMINIMUM WAGESMONETARY POLICYNON-WAGE COSTSNORMAL GOODOPEN ECONOMYOPPORTUNITY COSTPAYROLL TAXPAYROLL TAXESPRELIMINARY ANALYSISPRICE CHANGEPRICE INCREASEPRIVATE SERVICESPRODUCER PRICESPRODUCTION INCREASESPROTECTIONISMPUBLIC SECTOR EMPLOYMENTPUBLIC SERVICESREAL GDPREAL WAGESRECIPIENT COUNTRIESRECIPIENT HOUSEHOLDSRELATIVE PRICESREMITTANCEREMITTANCE FLOWSREMITTANCE IMPACTREMITTANCE INFLOWSREMITTANCE RECEIPTSREMITTANCESSALESSAVINGSSERVICE SECTORSSEVERANCE PAYMENTSSMALL MANUFACTURINGSPREADSUBSTITUTIONSUBSTITUTION EFFECTSUPPLY CURVESUPPLY EQUATIONSUPPLY FUNCTIONTAX REVENUESTAXATIONTOTAL WAGETRADE BALANCETRANSFER MONEYTRINIDAD AND TOBAGOUNEMPLOYEDUNSKILLED LABORUNSKILLED WORKERSUTILITY FUNCTIONVALUE ADDEDVOLATILITYVOLUME OF REMITTANCESWAGE GROWTHWAGE RATEWORKERWORKERSWORKING CONDITIONSWorld Bank10.1596/1813-9450-4143