Macroeconomic Determinants of Workers' Remittances and Compensation of Employees in Sub-Saharan Africa

By Adenutsi, Deodat E. | The Journal of Developing Areas, Winter 2014 | Go to article overview

Macroeconomic Determinants of Workers' Remittances and Compensation of Employees in Sub-Saharan Africa


Adenutsi, Deodat E., The Journal of Developing Areas


ABSTRACT

In this paper, an attempt has been made to identify the macroeconomic determinants of migrant remittances received in Sub-Saharan Africa (SSA) at the disaggregated level. The underlying motivation is that, given their unique characteristics, permanent and temporary migrants are likely to respond differently to macroeconomic conditions in migrant-host countries and their native or migrant-home countries. For the empirical analysis, the system Generalized Method of Moments (GMM) approach was used to estimate a dynamic panel-data model involving 36 SSA countries over the period, 1980-2009. It was found that the inflows of compensation of employees and workers' remittances to SSA are influenced by host-country macroeconomic conditions in a similar way, whereas these two forms of remittances are driven by contrasting home-country macroeconomic conditions. Remittances from permanent migrants are less altruistic than remittances from temporary migrants. To attract higher remittances on a more permanent basis, the implementation of stable macroeconomic and pro-growth policies are inevitable in labor-exporting SSA countries.

JEL Classification: C23, E42, F22, F24, J33

Keywords: Workers' Remittances, Compensation of Employees, Money, Migrant, SSA

Corresponding Author's Email: deo.adenutsi@gmail.com

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

According to the United Nations (2009), Europe leads as the main host of migrants with 32.6 percent of international migrant stock, followed by Asia (28.6 percent), North America (23.4 percent), Africa (9 percent), Oceania (2.8 percent) and Latin America (2.4 percent). Clearly, the net international migration trend is South-North, given the widening income gap and contrasting working conditions between the industrialized North and the impoverished South. Although labor-exporting countries may suffer from brain-drain, these low-income countries have been benefiting directly by way of international remittances. This could be the most obvious explanation as to why developing countries are the main destinations of migrant remittances with the industrialized world maintaining its status as the main source of remittance flows1. It is also not surprising that remittances have, over the past three decades, emerged strongly as an alternative source of development finance in many developing countries.

In recent years, official remittances alone surpass Official Development Assistance (ODA) and Foreign Direct Investment (FDI) in India, China, Mexico, Philippines, Lesotho, and in many other countries in Latin America and the Caribbean and South Asia.2 Official migrant remittances received by developing countries reached US$116 billion in 2003 representing more than 1.5 percent of their gross domestic product (GDP)3. In 2004, migrant remittances of US$126 billion became the second most important source of foreign exchange earnings to developing countries (World Bank, 2006). This was the year in which FDI to developing countries stood at US$165 billion with gross ODA amounting to US$79 billion (World Bank, 2006). Recorded migrant remittances received by developing countries rose to US$194.2 billion in 2005, reaching an all-time high of US$336 billion in 2008 before plummeting to US$316 billion in 2009, in response to the global financial crisis of 2007-2009 (World Bank, 2010). Still, the relatively superior importance of migrant remittances over other capital inflows in developing countries, with respect to size, growth rate and stability, remains unchanged over the past four decades as the decline in 2009 is only the second after the first was recorded in 1985.

Despite the general positive growth trend in migrant remittances, and also having being a major exporter of migrants, it is puzzling that SSA as a sub-region has remained the least recipient of official migrant remittances in terms of actual volume and per capita (see Figure A2 in the Appendix), a situation that raises a lot of questions. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Macroeconomic Determinants of Workers' Remittances and Compensation of Employees in Sub-Saharan Africa
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.