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The Effects of International Remittances on Poverty and Inequality in Ethiopia

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  • Beyene, Berhe Mekonnen

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    (Dept. of Economics, University of Oslo)

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    Abstract

    The paper studies the effects of international remittances on poverty and inequality in Ethiopia using an urban household survey from 2004. In order to identify the effects of remittances on poverty and inequality, counterfactual consumption in the hypothetical case of no remittance is estimated in a selection corrected estimation framework. Inequality and poverty values in the hypothetical and actual cases are then compared. There is a significant reduction in poverty while inequality does not change. The head count, the poverty gap and the squared poverty gap ratios decreased by 2.5%, 1.1% and 0.6% respectively.

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2012/Memo-13-2012.pdf
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    Bibliographic Info

    Paper provided by Oslo University, Department of Economics in its series Memorandum with number 13/2012.

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    Length: 37 pages
    Date of creation: 15 Mar 2012
    Date of revision:
    Handle: RePEc:hhs:osloec:2012_013

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    Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
    Phone: 22 85 51 27
    Fax: 22 85 50 35
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    Web page: http://www.oekonomi.uio.no/indexe.html
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    Keywords: remittances; poverty; inequality; Ethiopia;

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    1. Adams, Richard H. Jr., 2005. "Remittances, household expenditure and investment in Guatemala," Policy Research Working Paper Series 3532, The World Bank.
    2. Tigran A. Melkonyan & David A. Grigorian, 2008. "Microeconomic Implications of Remittances in an Overlapping Generations Model with Altruism and Self-Interest," IMF Working Papers 08/19, International Monetary Fund.
    3. Mesplé-Somps, Sandrine & Lessourd, Thomas & Gubert, Flore, 2009. "Do remittances affect poverty and inequality ? Evidence from Mali," Economics Papers from University Paris Dauphine 123456789/5836, Paris Dauphine University.
    4. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
    5. HwaJung Choi, 2007. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," World Bank Economic Review, World Bank Group, vol. 21(2), pages 219-248, May.
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    8. Acosta, Pablo & Calderon, Cesar & Fajnzylber, Pablo & Lopez, Humberto, 2007. "What is the impact of international remittances on poverty and inequality in Latin America ?," Policy Research Working Paper Series 4249, The World Bank.
    9. 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.
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    12. Gebremedhin, Tesfaye A. & Whelan, Stephen, 2005. "Prices and poverty in urban Ethiopia," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137920, Australian Agricultural and Resource Economics Society.
    13. Angus Deaton & Salman Zaidi, 1999. "Guidelines for Constructing Consumption Aggregates For Welfare Analysis," Working Papers 217, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    14. Ravallion, Martin, 2001. "Growth, inequality, and poverty : looking beyond averages," Policy Research Working Paper Series 2558, The World Bank.
    15. Brown, Richard P.C. & Jimenez, Eliana, 2007. "Estimating the Net Effects of Migration and Remittances on Poverty and Inequality: Comparison of Fiji and Tonga," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    16. Christopher Cramer, 2003. "Does inequality cause conflict?," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(4), pages 397-412.
    17. John Anyanwu & Andrew E. O. Erhijakpor, 2010. "Do International Remittances Affect Poverty in Africa?," African Development Review, African Development Bank, vol. 22(1), pages 51-91.
    18. Barham, Bradford & Boucher, Stephen, 1998. "Migration, remittances, and inequality: estimating the net effects of migration on income distribution," Journal of Development Economics, Elsevier, vol. 55(2), pages 307-331, April.
    19. Pablo Acosta, 2011. "School Attendance, Child Labour, and Remittances from International Migration in El Salvador," Journal of Development Studies, Taylor & Francis Journals, vol. 47(6), pages 913-936.
    20. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
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