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Remittances, Poverty And Inequality

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  • Luis San Vicente Portes

    (Montclair State University)

Abstract

This paper explores the effect of remittances across the distribution of income. Based on a panel of 46 countries that covers the period between 1970 and 2000, we find that the effect of remittances is non-monotone across the distribution of income and strongest in low income countries. The impact of remittances is positive and decreasing in income for the bottom 70 percent of the population, and negative and increasing in income in the top 20 percent of the population. All else equal, remittances decrease inequality as their effect is mostly felt among the poor and they are negatively related to the income of the rich. We estimate that for low income countries a 1 percent increase in remittances would increase the first decile¡¯s income by approximately 0.43 percent, while the same change would increase the seventh decile¡¯s income by only 0.04 percent. In contrast, a 1 percent increase in remittances is associated with a 0.10 percent decrease in the income of the top 10 percent of the population.

Suggested Citation

  • Luis San Vicente Portes, 2009. "Remittances, Poverty And Inequality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(1), pages 127-140, June.
    • Handle: RePEc:jed:journl:v:34:y:2009:i:1:p:127-140
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    References listed on IDEAS

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    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    2. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
    3. Acosta, Pablo & Fajnzylber, Pablo & Lopez, J. Humberto, 2007. "The impact of remittances on poverty and human capital : evidence from Latin American household surveys," Policy Research Working Paper Series 4247, The World Bank.
    4. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
    5. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
    6. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
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    Cited by:

    1. Adenutsi, Deodat E., 2010. "Do international remittances promote human development in poor countries? Empirical evidence from Sub-Saharan Africa," MPRA Paper 29347, University Library of Munich, Germany.
    2. Courage Mlambo & Forget Kapingura, 2020. "Remittances and Economic Development: Evidence from SADC Countries?," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 8(4), pages 261-273.
    3. Moises Neil V. Serino & Donghun Kim, 2011. "How Do International Remittances Affect Poverty In Developing Countries? A Quantile Regression Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(4), pages 17-40, December.
    4. Mamoun Benmamoun & Kevin Lehnert, 2013. "Financing Growth: Comparing The Effects Of Fdi, Oda, And International Remittances," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 43-65, June.

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    More about this item

    Keywords

    Remittances; Poverty; Inequality; Migration;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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