The Place Premium Paradox in Evaluating the Theories of Migration Through the Lens of Remittances

Traditional models in international economics predict different results of the impact of education and skills on migrants' income or remittances. According to the new model of Place Premium Paradox based on human capital theory, low-skilled migrants earn more than high-skilled professionals. This result is supported by the remittances that they send to their home countries. This study investigates the migration–remittances paradox by testing whether creative labour mobility and ethical remittance frameworks can transform migration challenges into sustainable development. This study is based on 109-country panel data for the period 2000–2024. It examined whether migration enhances labour productivity, schooling, and innovation, and whether remittances generate measurable welfare gains. This analysis applies Driscoll–Kraay fixed effects, System GMM, and Panel VAR models to test three theory-derived hypotheses. Results show development gains arise from income flows rather than skill-based spillovers.