Internal Remittances, Vocational Training Costs and Rural-Urban Migration in Developing Countries

Abstract

The paper develops a three - sector general equilibrium model to examine the consequences of an increase in vocational training costs on internal remittances in a small open dual economy. Using indirect utility functions, the paper endogenizes the internal remittances. The theoretical analysis shows that an increase in vocational training cost of the manufacturing sector decreases internal remittances and the proportion of remittances in migrants’ income. In addition, an increase in per capita training cost also contributes to expanding the informal sector and contracting the agricultural sector.