Remittances, Entrepreneurship, and Employment Dynamics Over the Business Cycle

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: We incorporate remittances and microentrepreneurship (self-employment) into a small openeconomy business cycle model with capital and labor market frictions. Countercyclical remittances moderate the decline of households' consumption during recessions. These remittances also are used to finance the start-up costs of microenterprises that bolster households' income during economic downturns. However, the positive income effect from countercyclical remittances also leads to a decrease in salaried labor supply, which generates offsetting upward pressure on wages during recessions and adversely affects the recovery of the salaried sector. Therefore, the behavior of remittances decisively affects labor force participation and the composition of employment between nonsalaried and salaried employment over the business cycle. The model delivers labor market and aggregate cyclical dynamics that are consistent with the Mexican data. Terms of use: Documents inJEL classification: E24, E32

Areas of small business development in Ukraine in the conditions of European integration

“…At present, most scientific works focus on the study of regularities in the process of modeling of the organizational development of economic entities, in particular, the special features of alternative models of organizational development, the possibility of their adaptation to market needs and practical application (Shapiro & Mandelman (2016)). As organizational development is one of the ways to make organizational changes, the author considers it appropriate to consider models of organizational change in more detail.…”

Counterfactual Inflation Targeting in Nepal

“…To specify the evolution of rm t , this study follows Shapiro and Mandelman (2016), who underscored altruism as a motivation behind workers’ remittances and assumed that an increase in the income level decreases remittance inflows at an aggregate level: …”

A Note on Optimal Capital Taxation With Preference Externalities

“…The technology coefficient is normalized to A = 1. Following Karnizova (2010) and Finkelstein Shapiro and Mandelman (2016), the capital share is set to α = 0.32. The rate of time preference is set to ρ = 0.04, as used by Kydland and Prescott (1991), Aguiar-Conraria and Wen 2008, and Lai et al (2017).…”

“…The rate of time preference is set to ρ = 0.04, as used by Kydland and Prescott (1991), Aguiar-Conraria and Wen 2008, and Lai et al (2017). 9 The annual depreciation rate is set to δ = 0.1, as used by Aguiar-Conraria and Wen 2008, Karnizova (2010), and Finkelstein Shapiro and Mandelman (2016). The time endowment is normalized to T = 100, and the leisure time is set to L = 67 so that the fraction of time allocated to the labor market is one third.…”