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Measuring the effect of bi-directional migration remittances on poverty and inequality in Nicaragua

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  • Andrew W. Hobbs
  • Kenneth P. Jameson

Abstract

This article examines the impact of migrants’ remittances on poverty and income distribution in Nicaragua. Nicaraguan emigrants are fairly evenly distributed between the US and Costa Rica. Poorer migrants overwhelmingly migrate to Costa Rica; richer migrants favour the US. This bi-directional flow provides an opportunity to examine the distributional impacts of remittances in a situation that offers distinct opportunities to different groups of prospective migrants. To this end, we use Heckman's (1979) sample selection method to predict counterfactual ‘no-migration’ consumption figures for Nicaraguan households whose members have emigrated. Using these estimates, we are able to compare the current situation to one in which migration had not occurred. We find that migration to Costa Rica results in increased per capita household consumption for poor households, while migration to the US leads to increase in middle class households. The rate, depth and severity of poverty as measured by the Foster, Greer, Thorbecke Indices (Foster et al ., 1984) decrease, though only slightly. However, inequality appears to increase, likely because the middle class benefits from US migration, while the poor tend to make it no farther than Costa Rica.

Suggested Citation

  • Andrew W. Hobbs & Kenneth P. Jameson, 2012. "Measuring the effect of bi-directional migration remittances on poverty and inequality in Nicaragua," Applied Economics, Taylor & Francis Journals, vol. 44(19), pages 2451-2460, July.
    • Handle: RePEc:taf:applec:44:y:2012:i:19:p:2451-2460
    DOI: 10.1080/00036846.2011.564153
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    References listed on IDEAS

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    1. Naufal, George S, 2007. "Who Remits? The Case of Nicaragua," IZA Discussion Papers 3081, Institute of Labor Economics (IZA).
    2. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
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    Cited by:

    1. Bang, James T. & Mitra, Aniruddha & Wunnava, Phanindra V., 2013. "Financial Liberalization and Remittances: Recent Longitudinal Evidence," IZA Discussion Papers 7497, Institute of Labor Economics (IZA).
    2. Selçuk Akçay, 2022. "Remittances and income inequality in the Philippines," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(1), pages 30-47, May.
    3. Nuñez, Roy & Osorio-Caballero, María Isabel, 2021. "Remittances, migration and poverty. A study for Mexico and Central America," MPRA Paper 106018, University Library of Munich, Germany.
    4. Erica B. Sausner & Nicole Webster, 2016. "Migration and Community Resilience in Nicaraguan Afro-Caribbean Coastal Communities," Journal of Developing Societies, , vol. 32(4), pages 484-507, December.
    5. N. Abiodun LAWAL & Emmanuel Aderinola ADEGUN & Timothy Ayomitunde ADEREMI & Risikat O.S. DAUDA, 2022. "Migrant Remittances, Growth and Poverty Reduction: ARDL- Bounds Test and Granger Causality Approach," Business & Management Compass, University of Economics Varna, issue 1-2, pages 74-90.
    6. Davis, Jason, 2018. "School enrollment effects in a South-South migration context," International Journal of Educational Development, Elsevier, vol. 62(C), pages 157-164.

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