Template-type: ReDIF-Paper 1.0
Author-Name: Bertoli Simone
Author-Email: simone.bertoli@unifi.it
Author-Workplace-Name: University of Turin
Author-Workplace-Homepage: http://www.est.unito.it/
Title: Remittances and the Dynamics of Human Capitalin the Recipient Country
Abstract: This paper provides an analysis of the impact of migration and remittances on the inter-generational 
evolution of human capital in an economy that is characterized by the existence of a poverty trap at a low level of 
human capital. The analysis is conducted within an overlapping generation model, where parental investment in 
education are driven by weakly altruistic motivations. 
Remittances boost educational expenditure in recipient households, and they can determine a decisive impact on 
the long-term dynamics of human capital under favourable assumptions on the wage differential and on migration 
costs. Under these assumptions, an exogenous probability to migrate represents an equal probability of moving out 
of the poverty trap, that fades away in the long run, as remittances lead all households to converge towards the 
equilibrium at a high level of human capital. Although this model does not analyze the general equilibrium effects 
of remittances – as it is grounded on the independence of households’ dynamics – it provides a framework that is 
open to such an extension, that is called for by the literature on the Dutch Disease effects of remittances. 
Length: 30 pages
Creation-Date: 2006-06
File-URL: http://www.est.unito.it/do/home.pl/Download?doc=/allegati/wp2006dip/7_wp_bertoli.pdf
File-Format: Application/PDF
Handle: RePEc:uto:dipeco:200607