Template-type: ReDIF-Paper 1.0

Author-Name: Isaac Dadson
Author-Name-First: Isaac
Author-Name-Last: Dadson
Author-Email: idadson@iuj.ac.jp
Author-Workplace-Name: Ghana Statistical Service, Economic Statistics Division, Ghana
Author-Name: Ryuta Ray Kato

Author-Name-First: Ryuta

Author-Name-Last: Kato

Author-Email: kato@iuj.ac.jp

Author-Workplace-Name: International University of Japan

Author-Workplace-Homepage: http://www.iuj.ac.jp/

Title: Remittances and the Brain Drain in Ghana: A Computable General Equilibrium Approach
Abstract: This paper presents a computable general equilibrium (CGE) framework to numerically examine the impact of remittances and the brain drain on poverty reduction as well as income inequality in Ghana. The generalized framework with the latest Ghanaian input-output table of year 2005 with 59 different production sectors provides the following results: On the impact of remittances, more remittances reduce poverty, and expand the Ghanaian economy. On the impact on income inequality, it depends on who receives more remittances. If the rural (urban) households receive more remittances, then income inequality shrinks (widens). On the impact of the brain drain, it is negative to both poverty reduction and income inequality, even if the externality effect of the brain drain is taken into account. On the overall impact of both remittances and the brain drain in Ghana, income inequality becomes more severe. On the other hand, the overall impact on poverty reduction, it depends on the amount of remittances as well as the sector where the brain drain occurs. As long as the brain drain occurs in either the education or the health sector, then the positive impact of remittances outweighs the negative impact of the brain drain. However, if the brain drain occurs in the public administration sector, then more remittances are needed to offset the negative impact of more brain drain. Furthermore, if the brain drain occurs in all sectors by more than 5 percent, then even a 30 percent increase in remittances to both rural and urban households is not large enough to offset the negative impact of the brain drain, thus, eventuating in the Ghanaian economy being damaged as a whole.
Classification-JEL: C68, D58, I32, and O15
Length: 76 pages

Creation-Date: 2015-10
Number: EMS_2015_04
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2015_04.pdf

File-Format: Application/pdf

File-Function: First version, 2015
File-Size: 435KB

Keywords: Ghana, Remittance, Brain Drain, Poverty, Income Inequality, ComputableGeneral Equilibrium (CGE) Model, Simulation
Handle: RePEc:iuj:wpaper:EMS_2015_04