Human Capital, Migration and Remittance in Developing Countries: A General Equilibrium Approach

The paper develops a three-sector model with Harris–Todaro type unemployment to examine the consequences of an increase of migrants’ human capital on remittance within a small open dual economy. By using indirect utility functions, the paper endogenizes the remittance. The theoretical analysis shows that an increase of human capital level of rural migrants increases their income, urban consumption and remittance, while its effect on the proportion of remittance in migrants’ income depends on the impact of remittance on agricultural production.