International remittances, migration and primary commodities

Abstract

This paper documents the global crude oil market as a key driver of international migration and remittances. Structural estimation documents that crude oil supply and demand shocks induce sizeable remittances flows. The sign and magnitude of remitter outflows differ across countries and structural shocks. A multilateral global general equilibrium model is used to show how oil‐exporting remitters generate international remittance and migration spillovers from crude oil price movements. Remittees’ economic outcomes from remittances and migration channels are found to be dominated by terms of trade channels for shocks to the global market for crude oil. Due to this, studies of remittance flows need to account for the source of the commodity price movement if using the correlation between remittee real GDP and remittance inflows.

Labor and behavior determinants of remittances in Saudi Arabia

“…The foreign demand shock is permanent, with the level of foreign real GDP higher by 0.7%, and the level of the global real price of crude oil is higher by 5%. This is consistent with the SVAR estimates from shocks to global demand estimated in Snudden ().…”

“…illustrates the structural IRFs from the same one standard deviation shock to foreign real GDP on the Saudi remittance outflows and labor market outcomes. Interestingly, and consistent with Snudden (), remittance outflows fall permanently by close to 3%. However, unlike in Snudden (), the fall in remittances can now be deconstructed into the response of migrant labor earnings and the MPR.…”

“…The identification of Kilian () is modified by allowing Saudi crude oil supply to respond contemporaneously to shocks to foreign oil supply and demand. This is also a modification of the Snudden () method that only allowed Saudi crude oil supply to respond to foreign oil crude oil supply innovations but not foreign oil demand shocks. This is motivated by the excess capacity in Saudi Arabia's crude oil production and its leadership among the Organization of the Petroleum Exporting Countries (OPEC) countries.…”

“…The paper is structured as follows. Section introduces the extension to the empirical method of Snudden () and the data set. Section summarizes the main results by reporting structural impulse response functions.…”

Determinants of remittances in Egypt: Do macroeconomic instability and oil price matter?

“…Theoretically, fluctuating oil prices affect oil exporting and importing countries differently (Snudden, ). For instance, falling oil prices might directly affect countries whose economies depend heavily on export of oil and petroleum products.…”