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GTAP Resource #4205

"Estimating effects of domestic transfers using alternative micro-foundations: how do they affect policies assessments?"
by Dienesch, Elisa

This paper aims at assessing how domestic urban-rural remittances can mitigate macroeconomic shocks in a developing country, especially in terms of income inequities. In particular, when trade liberalization occurs, it may affect the national income structure and increase regional poverty, following shifts in sectoral trade patterns. As underlined by Cox (1990, 2002), Cox and Jimenez (1998) and Morduch (1995), private transfers can significantly help households to deal with exogenous risk and similar studies also find evidence of an efficient risk sharing between the poorest households thanks to private cash exchange (Deaton, 1997; Townsend, 1995; Jalan and Ravallion, 1997). Then, this paper consists in assessing the mitigating impact of remittances on economic shocks by using a micro-macro CGE framework, in which transfer behavior is micro-founded. This model is applied to the case of Senegal and calibrated on a recent social accounting matrix of Senegal dated from 2006 (Fall, 2011). Indeed, Senegal is a developing country which is characterized by regional disparities in terms of employment rates, qualifications and poverty. These inequalities are particularly marked between urban and rural areas.
Three main challenges follow from the target of this paper: 1- the need to model the labor market as reflecting at the closest a dual-dual economy (Stifel and Thorbecke, 2003) that refers to the double dichotomy between urban and rural areas and formal and informal sectors; 2- treating the theoretical ambiguity of the motivations to remit, since there are many theoretical models; and 3- dealing with the credibility of data on inter-household transfers and treating household heterogeneity which is essential and which justifies the choice of a micro-macro framework.

In order to treat the first issue (and part of the third one), households are disaggregated as most as possible, following all available criteria in the all set of Senegalese households surveys, name...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Dienesch, E. (4/15/2013)
Updated: Dienesch, E. (4/15/2013)
Visits: 1,005
- Calibration and parameter estimation
- Labor market issues
- Migration
- Domestic policy analysis
- Other data bases and data issues
- Africa (West)

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