Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190244 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 823
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Building on an analytical model, we provide cross-country empirical evidence that net skilled emigration appreciates bilateral real exchange rates through the wage channel in source countries. Chains of causality in the presence of the Law of One Price run through the "spending effect" and the "resource allocation effect," analogous to the remittance-based Dutch disease effect. A pricing-to-market model allows pass-through for both traded and nontraded prices when the Law of One Price is violated. The skilled emigration elasticity of real exchange rate is estimated to be in the range of between .6 and .8, with internal prices playing a dominant role. Alternative model specifications show robust outcomes.
Subjects: 
emigration
exchange rate
the Dutch disease
JEL: 
F22
F31
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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