International Migration and the Role of Remittances in Eastern Europe

Abstract In this paper we analyse the effect of remittances on employment performance for Central and East European (CEE) economies. We show that the impact of remittances on unemployment depends on its effect on productivity growth and investment. In order to empirically analyse the impact of remittances we estimate a productivity equation using a set of 11 transition countries during the 1990 to 1999 period. Our results show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through its effect on investment.