In reduced-form discussions of the host-country demand effects of immigration, remittances are often treated as a one-for-one leakage from domestic expenditure. This note argues that such treatment is incomplete for issuers of internationally used currencies. Although remittances do reduce migrants' contemporaneous local spending, part of the remitted amount may reappear as an offset to the host economy through three distinct channels: seigniorage from foreign holdings of host-currency liabilities, demand for host-country exports, and foreign demand for host safe assets. These channels do not imply that remittances are equivalent to local consumption, nor that migrants' demand contribution should be measured by their full wage. They do imply, however, that the net host-country leakage from remittances may be smaller than standard calibrations assume. The argument is most relevant for reserve-currency issuers and remittance corridors linked to informal dollarization. Conceptually, the paper connects migration economics with the literatures on seigniorage and unofficial foreign-currency use.
Roman Petrov (Sat,) studied this question.