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Papers by olivier lohest

Research paper thumbnail of European Union and International Migrations

This paper builds on a new data set measuring emigration stocks and rates by educational attainme... more This paper builds on a new data set measuring emigration stocks and rates by educational attainment for all the world countries and most dependent territories in 1990 and 2000 (Docquier and Marfouk [2005]). We analyze the impact of the European Union on the international mobility of skilled workers. Compared to other oecd countries, the average skills of eu 15 immigrants are low. However, by attracting an important proportion of African migrants, the eu 15 plays an important role in the brain drain debate. The eu 15 is an important source of brain drain for countries which are strongly concerned by human capital shortages. This result is confirmed by Kernel density estimates. Regarding exchanges of skilled workers with the other traditional immigration countries, the eu 15 experiences a large deficit. This deficit is compensated by importing human capital from developing countries. On the whole, the net effect is very small compared to the large gains observed in the us, in Canada a...

Research paper thumbnail of Brain Drain in Developing Regions (1990-2000)

SSRN Electronic Journal, 2005

Brain Drain in Developing Regions (1990-2000) * In this paper, we analyze the distribution of the... more Brain Drain in Developing Regions (1990-2000) * In this paper, we analyze the distribution of the brain drain in the LAC region (Latin America and the Caribbean), Asia and Africa. We rely on an original data set on international migration by educational attainment for 1990 and 2000. Our analysis reveals that the brain drain is strong in Eastern, Middle and Western Africa, Central America and the Caribbean. However, the Kernel approach suggests that the dispersion and the intradistribution dynamics of skilled migration rates strongly differ across regions. We then tautologically disentangle the brain drain into two multiplicative components, the global migration rate and the selection bias. Among the most affected countries, LAC countries suffer from high migration rates whilst most African countries suffer from high selection biases. Finally, exploratory Moran's tests reveal strong spatial, political and cultural autocorrelations in migration rates and selection biases. The latter result suggests that skilled workers react differently than unskilled workers to a large set of variables.

Research paper thumbnail of Chapitre 1. Approche méthodologique pour un benchmarking régional au sein d'une union européenne élargie

Politique régionale européenne, 2006

Research paper thumbnail of The World Bank economic review 21 (2)

The World Bank Economic Review, 2007

The World Bank Economic Review is a professional journal for the dissemination of World Bank-spon... more The World Bank Economic Review is a professional journal for the dissemination of World Bank-sponsored and other research that may inform policy analysis and choice. It is directed to an international readership among economists and social scientists in government, business, international agencies, universities, and development research institutions. T h e Review seeks to provide the most current and best research in the field of quantitative development policy

Research paper thumbnail of Chapitre 5. La temporalité du processus de création

Economie Societe Region, Jun 1, 2009

Research paper thumbnail of Evaluation du compl�ment de programmation du plan de d�veloppement objectif 2: bassin Meuse-Vesdre

Research paper thumbnail of Evaluation ex ante du DOCUP objectif 2: zones rurales

Research paper thumbnail of Evaluation ex ante du DOCUP objectif 1: Hainaut

info:eu-repo/semantics/nonPublishe

Research paper thumbnail of Evaluation ex ante du DOCUP objectif 2: bassin Meuse-Vesdre

Research paper thumbnail of Motivations de création de nécessité et d’opportunité et secteurs de création

Research paper thumbnail of Logique d'action des primo-créateurs d'entreprise en Région wallonne: Identité et dynamiques push-pull

L'objectif de cette recherche exploratoire est, d'une part, d'examiner si, pour un ensemble d'ind... more L'objectif de cette recherche exploratoire est, d'une part, d'examiner si, pour un ensemble d'individus qui ont (ré)orienté leur trajectoire vers l'entrepreneuriat, il est possible de traduire celle-ci en termes de dynamiques push ou pull et, le cas échéant, de caractériser celles-ci et, d'autre part, d'éclairer les articulations entre ces dynamiques et les caractéristiques personnelles des entrepreneurs. La dichotomie push-pull est identifiée à l'aide d'une analyse en composantes principales appliquées aux résultats d'une enquête socio-économique. Les résultats montrent que les individus qui s'engagent dans un processus entrepreneurial ont rencontré une situation disruptive et/ou des opportunités et se positionnent, dès lors, avec plus ou moins d'intensité dans une dynamique que nous avons qualifiée de push ou pull. Ils démontrent également que les situations disruptives et les opportunités à l'origine du passage à la création peuvent être de nature très diverse et, par conséquent, que les dynamiques push et pull peuvent revêtir des formes différentes. Enfin, les résultats issus d'une analyse régressive montrent l'influence qu'exerce la position sociale et la trajectoire biographique des créateurs sur leur positionnement en termes de dynamiques push-pull. Logique d'action des primo-créateurs d'entreprise en Région wallonne : Identité et dynamiques push-pull

Research paper thumbnail of Entrepreneuriat contraint et volontaire

Revue internationale P.M.E.: Économie et gestion de la petite et moyenne entreprise, 2010

L’objectif de cette étude est de mettre en évidence l’influence des motivations de contrainte et ... more L’objectif de cette étude est de mettre en évidence l’influence des motivations de contrainte et volontaires sur le choix sectoriel de l’individu. Pour ce faire, nous utilisons un échantillon de 538 créateurs d’entreprises. À l’issue de notre étude, deux constats émergent. Premièrement, nos résultats indiquent qu’il existe bien entre les différents secteurs d’activité des sensibilités significativement différentes par rapport aux motivations de contrainte ou volontaires. Deuxièmement, notre recherche montre clairement que les motivations de contrainte et volontaires ont un impact significatif sur le choix sectoriel réalisé par l’individu. Les secteurs du commerce, de l’Horeca1 et des services, par exemple, correspondent davantage à un entrepreneuriat contraint et les secteurs de la finance, de l’industrie ou de la santé, à un entrepreneuriat volontaire.

Research paper thumbnail of Chapitre 4. Les logiques d'action des primo-créateurs d'entreprise en région wallonne: premiers éléments de caractérisation

Les logiques d'action entrepreneuriale, 2008

Research paper thumbnail of L'aversion au risque : une barrière à l'entrepreneuriat en Wallonie

Research paper thumbnail of Facteurs influençant la croissance de l'emploi des PME wallonnes

Les entreprises en croissance et, a fortiori, les entreprises à forte et à très forte croissance,... more Les entreprises en croissance et, a fortiori, les entreprises à forte et à très forte croissance, constituant une exception, mais contribuant plus que proportionnellement à la création d'emploi, il est essentiel de mieux cerner le phénomène de croissance. Celui-ci a déjà donné lieu à de nombreux travaux empiriques manquant toutefois d'ancrage théorique et se limitant à l'analyse de l'impact d'un nombre limité de types de variables. Après avoir choisi le modèle théorique qui sera utilisé pour analyser causalement la croissance, nous tenterons d'identifier les différents types de variables ayant donné lieu aux résultats les plus significatifs et de les tester simultanément. Ces variables feront l'objet d'une étude empirique sur un échantillon de plus de 500 primo-créateurs wallons. Plutôt que de formaliser la croissance des entreprises au travers d'une équation linéaire, comme c'est le cas de la plupart des travaux en sciences de gestion, sans distinguer les entreprises en décroissance de celles en stabilité, en croissance, en forte ou en très forte croissance, le modèle empirique utilisé est de type Tobit, permettant de tenir compte du fait que certaines entreprises ont connu une décroissance, une stagnation ou une croissance inférieure à des seuils de forte ou de très forte. L'originalité de cette communication repose donc sur son ancrage théorique, la diversité des types de variables étudiées, ses données et le traitement statistique choisi.Nos résultats montrent que quatre variables relatives à l'entrepreneur, trois variables concernant la firme et la seule variable choisie ayant trait à la stratégie, influencent significativement la croissance. Par contre, l'environnement ne semble pas avoir d'impact. Nos résultats démontrent que la croissance ne peut être appréhendée que dans une perspective multidimensionnelle et plaident pour l'adoption d'un modèle théorique complet intégrant des variables explicatives de types divers. En outre, elle ne peut être étudiée que dans ses déclinaisons, sous forme de croissance positive, de croissance forte ou très forte.

Research paper thumbnail of Evaluation du complément de programmation du plan de développement objectif 2: bassin Meuse-Vesdre

info:eu-repo/semantics/nonPublishe

Research paper thumbnail of Incremental Reform and Distortions in China's Product and Factor Markets

The World Bank Economic Review, 2007

The purpose of economic reform is to reduce distortions and enhance efficiency. However, when ref... more The purpose of economic reform is to reduce distortions and enhance efficiency. However, when reforms are partial and incremental, individuals and local governments are often able to capture the rent inherent in the gradual transition process. Young (2000) warned that such rent-seeking behavior might lead to increasing market fragmentation. Empirical studies have shown the opposite in the product market. This article argues that as the rent from China's product market has been squeezed out due to deepening reforms, rent-seeking behavior may have shifted to the capital market. Further reforms are needed in the capital market to squeeze out these rent-seeking opportunities, just as those from the product and labor markets were squeezed out earlier. JEL Code: D33, D61, D63, O11, O53, P23. Over the past 25 years, China's transformation from a centrally planned to an increasingly market-driven economy has led to substantial efficiency gains and rapid economic growth (Maddison 1998; Fan, Zhang and Robinson 2003). However, as Young (2000) argues, the reforms may not have been sufficiently complete to improve domestic market integration. This could happen, for example, if increased interregional competition as a result of fiscal decentralization led local governments to impose trade protection measures against each other. Young's work has stimulated a series of studies to investigate trends in market integration. A recent survey by the China State Council Development Research Center (2003) indicates that China's domestic product markets have become more rather than less integrated. Measures of regional protection have also declined significantly over the past decade. Wei and Fan (2004) show that output prices have become more integrated. Huang, Rozelle, and Chang (2004) use evidence from the rice market to argue that China's commodity markets are becoming increasingly integrated as a result of the reforms. Based on a Kong-Yam Tan

Research paper thumbnail of Brain Drain in Developing Countries

The World Bank Economic Review, 2007

We thank Jaime de Melo, Riccardo Faini and two anonymous referees for all their helpful comments ... more We thank Jaime de Melo, Riccardo Faini and two anonymous referees for all their helpful comments and suggestions on an earlier draft. The first author is grateful for the financial support from the Belgian French-speaking Community's programme "Action de recherches concertées" (ARC 03/08-302) and acknowledges financial support from the Belgian Federal Government (PAI grant P6/07 Economic Policy and Finance in the Global Equilibrium Analysis and Social Evaluation). The usual disclaimers apply.

Research paper thumbnail of Tracking Poverty Over Time in the Absence of Comparable Consumption Data

The World Bank Economic Review, 2007

Following the endorsement by the international community of the Millennium Development Goals, the... more Following the endorsement by the international community of the Millennium Development Goals, there has been an increasing demand for practical methods for steadily tracking poverty. An economically intuitive and inexpensive methodology is explored for doing so in the absence of regular, comparable data on household consumption. The minimum data requirements for this methodology are the availability of a household budget survey and a series of surveys with a comparable set of asset data also contained in the budget survey. This method is illustrated using a series of Demographic and Health Surveys for Kenya. JEL codes: C81, I32 The worldwide endorsement of the Millennium Development Goals and the shift to results-based lending in supporting developing countries have intensified the importance of being able to reliably gauge the evolution of poverty. The common approach to measuring poverty is anchored in utility theory and is empirically based on household consumption or income measures, which are usually derived from nationally representative household budget surveys (Ravallion 1996a; Deaton 2003). Obtaining reliable measures of household consumption presents a series of challenges in practice. 1 These challenges increase when comparing poverty over time.

Research paper thumbnail of Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines

The World Bank Economic Review, 2007

Do remittances sent by overseas migrants serve as insurance for recipient households? In a study ... more Do remittances sent by overseas migrants serve as insurance for recipient households? In a study of how remittances from overseas respond to income shocks experienced by Philippine households, changes in income are found to lead to changes in remittances in the opposite direction, consistent with an insurance motivation. Roughly 60 percent of declines in household income are replaced by remittance inflows from overseas. Because household income and remittances are jointly determined, rainfall shocks are used as instrumental variables for income changes. The hypothesis cannot be rejected that consumption in households with migrant members is unchanged in response to income shocks, whereas consumption responds strongly to income shocks in households without migrants. JEL codes: D81, F22, F32, O12, O15 Several facts motivate this study. First, life in developing countries is prone to many kinds of risk, such as crop and income loss due to natural disasters (weather, insect infestations, fire) and civil conflict. Second, international migration and remittance flows are substantial and growing. Between 1965 and 2000, individuals living outside their country of birth grew from 2.2 to 2.9 percent of the world population, totaling 175 million people in 2000. 1 The remittances that these migrants send to their countries of origin are an important but poorly understood type of international financial flow. In 2002, remittance receipts of developing countries totaled $79 billion. 2 This amount Dean Yang

Research paper thumbnail of European Union and International Migrations

This paper builds on a new data set measuring emigration stocks and rates by educational attainme... more This paper builds on a new data set measuring emigration stocks and rates by educational attainment for all the world countries and most dependent territories in 1990 and 2000 (Docquier and Marfouk [2005]). We analyze the impact of the European Union on the international mobility of skilled workers. Compared to other oecd countries, the average skills of eu 15 immigrants are low. However, by attracting an important proportion of African migrants, the eu 15 plays an important role in the brain drain debate. The eu 15 is an important source of brain drain for countries which are strongly concerned by human capital shortages. This result is confirmed by Kernel density estimates. Regarding exchanges of skilled workers with the other traditional immigration countries, the eu 15 experiences a large deficit. This deficit is compensated by importing human capital from developing countries. On the whole, the net effect is very small compared to the large gains observed in the us, in Canada a...

Research paper thumbnail of Brain Drain in Developing Regions (1990-2000)

SSRN Electronic Journal, 2005

Brain Drain in Developing Regions (1990-2000) * In this paper, we analyze the distribution of the... more Brain Drain in Developing Regions (1990-2000) * In this paper, we analyze the distribution of the brain drain in the LAC region (Latin America and the Caribbean), Asia and Africa. We rely on an original data set on international migration by educational attainment for 1990 and 2000. Our analysis reveals that the brain drain is strong in Eastern, Middle and Western Africa, Central America and the Caribbean. However, the Kernel approach suggests that the dispersion and the intradistribution dynamics of skilled migration rates strongly differ across regions. We then tautologically disentangle the brain drain into two multiplicative components, the global migration rate and the selection bias. Among the most affected countries, LAC countries suffer from high migration rates whilst most African countries suffer from high selection biases. Finally, exploratory Moran's tests reveal strong spatial, political and cultural autocorrelations in migration rates and selection biases. The latter result suggests that skilled workers react differently than unskilled workers to a large set of variables.

Research paper thumbnail of Chapitre 1. Approche méthodologique pour un benchmarking régional au sein d'une union européenne élargie

Politique régionale européenne, 2006

Research paper thumbnail of The World Bank economic review 21 (2)

The World Bank Economic Review, 2007

The World Bank Economic Review is a professional journal for the dissemination of World Bank-spon... more The World Bank Economic Review is a professional journal for the dissemination of World Bank-sponsored and other research that may inform policy analysis and choice. It is directed to an international readership among economists and social scientists in government, business, international agencies, universities, and development research institutions. T h e Review seeks to provide the most current and best research in the field of quantitative development policy

Research paper thumbnail of Chapitre 5. La temporalité du processus de création

Economie Societe Region, Jun 1, 2009

Research paper thumbnail of Evaluation du compl�ment de programmation du plan de d�veloppement objectif 2: bassin Meuse-Vesdre

Research paper thumbnail of Evaluation ex ante du DOCUP objectif 2: zones rurales

Research paper thumbnail of Evaluation ex ante du DOCUP objectif 1: Hainaut

info:eu-repo/semantics/nonPublishe

Research paper thumbnail of Evaluation ex ante du DOCUP objectif 2: bassin Meuse-Vesdre

Research paper thumbnail of Motivations de création de nécessité et d’opportunité et secteurs de création

Research paper thumbnail of Logique d'action des primo-créateurs d'entreprise en Région wallonne: Identité et dynamiques push-pull

L'objectif de cette recherche exploratoire est, d'une part, d'examiner si, pour un ensemble d'ind... more L'objectif de cette recherche exploratoire est, d'une part, d'examiner si, pour un ensemble d'individus qui ont (ré)orienté leur trajectoire vers l'entrepreneuriat, il est possible de traduire celle-ci en termes de dynamiques push ou pull et, le cas échéant, de caractériser celles-ci et, d'autre part, d'éclairer les articulations entre ces dynamiques et les caractéristiques personnelles des entrepreneurs. La dichotomie push-pull est identifiée à l'aide d'une analyse en composantes principales appliquées aux résultats d'une enquête socio-économique. Les résultats montrent que les individus qui s'engagent dans un processus entrepreneurial ont rencontré une situation disruptive et/ou des opportunités et se positionnent, dès lors, avec plus ou moins d'intensité dans une dynamique que nous avons qualifiée de push ou pull. Ils démontrent également que les situations disruptives et les opportunités à l'origine du passage à la création peuvent être de nature très diverse et, par conséquent, que les dynamiques push et pull peuvent revêtir des formes différentes. Enfin, les résultats issus d'une analyse régressive montrent l'influence qu'exerce la position sociale et la trajectoire biographique des créateurs sur leur positionnement en termes de dynamiques push-pull. Logique d'action des primo-créateurs d'entreprise en Région wallonne : Identité et dynamiques push-pull

Research paper thumbnail of Entrepreneuriat contraint et volontaire

Revue internationale P.M.E.: Économie et gestion de la petite et moyenne entreprise, 2010

L’objectif de cette étude est de mettre en évidence l’influence des motivations de contrainte et ... more L’objectif de cette étude est de mettre en évidence l’influence des motivations de contrainte et volontaires sur le choix sectoriel de l’individu. Pour ce faire, nous utilisons un échantillon de 538 créateurs d’entreprises. À l’issue de notre étude, deux constats émergent. Premièrement, nos résultats indiquent qu’il existe bien entre les différents secteurs d’activité des sensibilités significativement différentes par rapport aux motivations de contrainte ou volontaires. Deuxièmement, notre recherche montre clairement que les motivations de contrainte et volontaires ont un impact significatif sur le choix sectoriel réalisé par l’individu. Les secteurs du commerce, de l’Horeca1 et des services, par exemple, correspondent davantage à un entrepreneuriat contraint et les secteurs de la finance, de l’industrie ou de la santé, à un entrepreneuriat volontaire.

Research paper thumbnail of Chapitre 4. Les logiques d'action des primo-créateurs d'entreprise en région wallonne: premiers éléments de caractérisation

Les logiques d'action entrepreneuriale, 2008

Research paper thumbnail of L'aversion au risque : une barrière à l'entrepreneuriat en Wallonie

Research paper thumbnail of Facteurs influençant la croissance de l'emploi des PME wallonnes

Les entreprises en croissance et, a fortiori, les entreprises à forte et à très forte croissance,... more Les entreprises en croissance et, a fortiori, les entreprises à forte et à très forte croissance, constituant une exception, mais contribuant plus que proportionnellement à la création d'emploi, il est essentiel de mieux cerner le phénomène de croissance. Celui-ci a déjà donné lieu à de nombreux travaux empiriques manquant toutefois d'ancrage théorique et se limitant à l'analyse de l'impact d'un nombre limité de types de variables. Après avoir choisi le modèle théorique qui sera utilisé pour analyser causalement la croissance, nous tenterons d'identifier les différents types de variables ayant donné lieu aux résultats les plus significatifs et de les tester simultanément. Ces variables feront l'objet d'une étude empirique sur un échantillon de plus de 500 primo-créateurs wallons. Plutôt que de formaliser la croissance des entreprises au travers d'une équation linéaire, comme c'est le cas de la plupart des travaux en sciences de gestion, sans distinguer les entreprises en décroissance de celles en stabilité, en croissance, en forte ou en très forte croissance, le modèle empirique utilisé est de type Tobit, permettant de tenir compte du fait que certaines entreprises ont connu une décroissance, une stagnation ou une croissance inférieure à des seuils de forte ou de très forte. L'originalité de cette communication repose donc sur son ancrage théorique, la diversité des types de variables étudiées, ses données et le traitement statistique choisi.Nos résultats montrent que quatre variables relatives à l'entrepreneur, trois variables concernant la firme et la seule variable choisie ayant trait à la stratégie, influencent significativement la croissance. Par contre, l'environnement ne semble pas avoir d'impact. Nos résultats démontrent que la croissance ne peut être appréhendée que dans une perspective multidimensionnelle et plaident pour l'adoption d'un modèle théorique complet intégrant des variables explicatives de types divers. En outre, elle ne peut être étudiée que dans ses déclinaisons, sous forme de croissance positive, de croissance forte ou très forte.

Research paper thumbnail of Evaluation du complément de programmation du plan de développement objectif 2: bassin Meuse-Vesdre

info:eu-repo/semantics/nonPublishe

Research paper thumbnail of Incremental Reform and Distortions in China's Product and Factor Markets

The World Bank Economic Review, 2007

The purpose of economic reform is to reduce distortions and enhance efficiency. However, when ref... more The purpose of economic reform is to reduce distortions and enhance efficiency. However, when reforms are partial and incremental, individuals and local governments are often able to capture the rent inherent in the gradual transition process. Young (2000) warned that such rent-seeking behavior might lead to increasing market fragmentation. Empirical studies have shown the opposite in the product market. This article argues that as the rent from China's product market has been squeezed out due to deepening reforms, rent-seeking behavior may have shifted to the capital market. Further reforms are needed in the capital market to squeeze out these rent-seeking opportunities, just as those from the product and labor markets were squeezed out earlier. JEL Code: D33, D61, D63, O11, O53, P23. Over the past 25 years, China's transformation from a centrally planned to an increasingly market-driven economy has led to substantial efficiency gains and rapid economic growth (Maddison 1998; Fan, Zhang and Robinson 2003). However, as Young (2000) argues, the reforms may not have been sufficiently complete to improve domestic market integration. This could happen, for example, if increased interregional competition as a result of fiscal decentralization led local governments to impose trade protection measures against each other. Young's work has stimulated a series of studies to investigate trends in market integration. A recent survey by the China State Council Development Research Center (2003) indicates that China's domestic product markets have become more rather than less integrated. Measures of regional protection have also declined significantly over the past decade. Wei and Fan (2004) show that output prices have become more integrated. Huang, Rozelle, and Chang (2004) use evidence from the rice market to argue that China's commodity markets are becoming increasingly integrated as a result of the reforms. Based on a Kong-Yam Tan

Research paper thumbnail of Brain Drain in Developing Countries

The World Bank Economic Review, 2007

We thank Jaime de Melo, Riccardo Faini and two anonymous referees for all their helpful comments ... more We thank Jaime de Melo, Riccardo Faini and two anonymous referees for all their helpful comments and suggestions on an earlier draft. The first author is grateful for the financial support from the Belgian French-speaking Community's programme "Action de recherches concertées" (ARC 03/08-302) and acknowledges financial support from the Belgian Federal Government (PAI grant P6/07 Economic Policy and Finance in the Global Equilibrium Analysis and Social Evaluation). The usual disclaimers apply.

Research paper thumbnail of Tracking Poverty Over Time in the Absence of Comparable Consumption Data

The World Bank Economic Review, 2007

Following the endorsement by the international community of the Millennium Development Goals, the... more Following the endorsement by the international community of the Millennium Development Goals, there has been an increasing demand for practical methods for steadily tracking poverty. An economically intuitive and inexpensive methodology is explored for doing so in the absence of regular, comparable data on household consumption. The minimum data requirements for this methodology are the availability of a household budget survey and a series of surveys with a comparable set of asset data also contained in the budget survey. This method is illustrated using a series of Demographic and Health Surveys for Kenya. JEL codes: C81, I32 The worldwide endorsement of the Millennium Development Goals and the shift to results-based lending in supporting developing countries have intensified the importance of being able to reliably gauge the evolution of poverty. The common approach to measuring poverty is anchored in utility theory and is empirically based on household consumption or income measures, which are usually derived from nationally representative household budget surveys (Ravallion 1996a; Deaton 2003). Obtaining reliable measures of household consumption presents a series of challenges in practice. 1 These challenges increase when comparing poverty over time.

Research paper thumbnail of Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines

The World Bank Economic Review, 2007

Do remittances sent by overseas migrants serve as insurance for recipient households? In a study ... more Do remittances sent by overseas migrants serve as insurance for recipient households? In a study of how remittances from overseas respond to income shocks experienced by Philippine households, changes in income are found to lead to changes in remittances in the opposite direction, consistent with an insurance motivation. Roughly 60 percent of declines in household income are replaced by remittance inflows from overseas. Because household income and remittances are jointly determined, rainfall shocks are used as instrumental variables for income changes. The hypothesis cannot be rejected that consumption in households with migrant members is unchanged in response to income shocks, whereas consumption responds strongly to income shocks in households without migrants. JEL codes: D81, F22, F32, O12, O15 Several facts motivate this study. First, life in developing countries is prone to many kinds of risk, such as crop and income loss due to natural disasters (weather, insect infestations, fire) and civil conflict. Second, international migration and remittance flows are substantial and growing. Between 1965 and 2000, individuals living outside their country of birth grew from 2.2 to 2.9 percent of the world population, totaling 175 million people in 2000. 1 The remittances that these migrants send to their countries of origin are an important but poorly understood type of international financial flow. In 2002, remittance receipts of developing countries totaled $79 billion. 2 This amount Dean Yang