Chapter 7 Foreign Aid, International Migration and Welfare

Abstract

This paper examines the effects of foreign aid on emigration and welfare of the remaining residents in an economy producing traded and non-traded goods. There are three distinct types of households: the rich, the poor, and the relatives of emigrants. Donor country's aid is provided to discourage the poor from emigrating. The extent to which it achieves this objective is shown to be an important factor determining the welfare implications of aid for every type of household residing in the economy. The paper also considers the impact of foreign aid on remittance flows and total foreign exchange earnings of the recipient country.

Citation

Djajić, S. (2006), "Chapter 7 Foreign Aid, International Migration and Welfare", Lahiri, S. (Ed.) Theory and Practice of Foreign Aid (Frontiers of Economics and Globalization, Vol. 1), Emerald Group Publishing Limited, Leeds, pp. 105-115. https://doi.org/10.1016/S1574-8715(06)01007-4