@article{Timmer:331555,
      recid = {331555},
      author = {Timmer, Hans and van der Mensbrugghe, Dominique},
      title = {International Migration, Purchasing Power Parity (PPP) and  the Money Metric of Welfare Gains},
      address = {2006},
      pages = {19},
      year = {2006},
      note = {Presented at the 9th Annual Conference on Global Economic  Analysis, Addis Ababa, Ethiopia},
      abstract = {This paper argues that the rise in real global income as a  result of migration from low-income countries to  high-income countries overestimates the money metric of  global welfare gains by at least a factor of two. This is  contrary to the analysis of trade policies where the rise  in real income, calculated according to national accounting  convention, does provide an accurate estimate of the money  metric of welfare gains. The complication in migration  scenarios arises because the price changes that a migrant  experiences, as prices of non-tradable goods differ  significantly between the host and home countries, are not  represented in the deflators of the host country, but  should be taken into account in the money metric of the  welfare change of the migrant. Adjustment of real income of  migrants using purchasing-powerparity (PPP) adjustment  factors provides a good approximation of the money metric  of welfare gains. The correct application of the money  metric of welfare produces in the case of migration a  counterintuitive example of money transfers that increase  the money metric of global welfare. Remittances by migrants  back to their home country should not be PPP-adjusted, as  those who remain in the host country, do not experience a  significant change in prices. Because income of new  migrants that is not remitted home should be PPP-adjusted,  remittances by new migrants increase global welfare.},
      url = {http://ageconsearch.umn.edu/record/331555},
}