product or because capital is substituted for labor. The pressure to increase productivity in the nontraded goods sectors is much weaker because firms in these sectors will be more able to pass on their higher costs to domestic customers than are firms in the traded goods sectors, hence real unit labor costs in the nontraded goods sectors are very likely to rise.

The most comprehensive investigation of the labor market effects of remittances is by Chami et al (2018). Using panel data from a large sample of countries, they estimate a series of regressions in which a labor market outcome is the dependent variable and remittances as a share of GDP is one of the independent variables. They find that remittances reduce unemployment and labor force participation, increase the prevalence of informal employment and depress wage growth but raise the labor share of income (which corresponds to raising real unit labor costs). The last two findings imply that remittances depress labor productivity growth. To explain this finding, they also show that remittances induce a shift of labor from traded goods industries (agriculture and manufacturing) to non-traded goods industries (services and construction), as would be expected in economies incurring Dutch disease effects, which they argue indicates a shift from higher to lower labor productivity activities.

Most of the rest of the empirical literature on the labor market effects of migration and remittances falls into two strands. In the first strand are mostly single country studies which use household survey data to examine the effects of remittances on the labor supply decisions of households. Several of these studies pertain to countries in ECA. Justino and Shemyakina (2012), using data from the 2003 Tajikistan Living Standards Survey, find that the receipt of remittance income by a household has a negative and significant effect on both male and female household members’ participation in the labor force and also on the hours of work of household members who participate in the labor force.<sup>.</sup> Similar effects have been found in other countries with high remittance receipts. Grigorian and Melkonyan (2011) find that households which receive remittances work fewer hours than households which do not in Armenia. Kalaj (2013) applies a propensity score matching procedure to Albanian household survey data to study whether the labor market decisions of households which receive remittances differ from those which do not. She finds that there are no statistically significant differences in the labor market decisions of males but that females in remittance recipient households work fewer hours than their counterparts in non-remittance recipient households.

Görlich et al (2007) look more closely at the reasons why households which receive remittances reduce participation in the labor market. Using labor force survey data from Moldova, they find that the receipt of remittances by households has a small but significant negative impact on labor force participation, but that this is associated with increased participation in higher education among younger workers and increased household production activities (e.g. childcare or subsistence farming) among middle age workers. Ivlevs (2016), using data from surveys in six transition economies in 2009, finds that remittances increase the likelihood that households will engage in informal labor employment: this effect pertains to both households which receive remittances and those which do not but which reside in areas where there is a high prevalence of remittance receiving households.

Outside ECA, Kim (2007) and Ndiaye et al (2016) find that remittances reduce labor market participation in Jamaica and Senegal respectively. Airola (2008) finds that hours worked by household heads in Mexico are negatively correlated with the receipt of remittance income and Amuedo-Dorantes and Pozo (2006) find that, in Mexico, remittances did not reduce the overall hours worked by men but that they were associated with a shift from formal to informal 4