Reverse migration and exports at extensive margin: case of a small dependent economy.

We analyse the implications of reverse migration on export quality upgrading by the origin country. Other than a favourable endowment shock by raising the native country's labour supply, reverse migration cause loss of remittances from unskilled emigrants and capital investments made by skilled emigrants. Resulting loss of national income and correspondingly domestic demand affect local factor prices and consequently the competitiveness of exports, when the economy produces non-traded goods.