Migration, remittances and competition in international labour market

Abstract

Remittances are considered as an important component of GDP in many developing countries. In order to increase remittance inflows many countries are now actively involved in labour export and thereby competing with other labour exporting countries in the international market. In this paper we have conceptualised the competition by proposing a model where two countries export labour to a third country. The third country imposes differential tax rates on the income of foreign workers. We have explored the process of imposition of tax rates by importing country and found that tax burden is higher for the country with higher labour endowment.