Advanced Search
MyIDEAS: Login to save this paper or follow this series

International Remittances and Income Inequality: An Empirical Investigation

Contents:

Author Info

  • Gianmarco León
  • Valerie Koechlin

Abstract

The aim of this paper is to provide comprehensive empirical evidence on the relationship between international remittances and income inequality. In simple cross-country regressions we find a non-monotonic link between these two variables when using ordinary least squares, instrumental variables; we also test our hypothesis using dynamic panel data methods. We provide evidence in support of existing theoretical work that accounts for network effects that describe how, in the first stages of migration history, there is an inequality-increasing effect of remittances on income inequality. Then, as the opportunity cost of migrating is lowered due to these effects, remittances sent to those households have a negative impact on inequality. We also show how education and the development of the financial sector can help countries to reach the inequality-decreasing section of the curve more quickly. Our results are robust to several empirical specifications, as well as for a wide variety of inequality measures.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.iadb.org/research/pub_hits.cfm?pub_id=WP-571&pub_file_name=pubWP-571.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4475.

as in new window
Length:
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:idb:wpaper:4475

Contact details of provider:
Postal: 1300 New York Avenue, NW, Washington, DC 20577
Phone: 202-623-1000
Email:
Web page: http://www.iadb.org/res
More information through EDIRC

Related research

Keywords:

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Adams, Richard H, Jr, 1989. "Worker Remittances and Inequality in Rural Egypt," Economic Development and Cultural Change, University of Chicago Press, vol. 38(1), pages 45-71, October.
  2. repec:gua:wpaper:ec200506 is not listed on IDEAS
  3. Frédéric Docquier & Hillel Rapoport, 2003. "Remittances and Inequality: A Dynamic Migration Model," Working Papers 2003-05, Department of Economics, Bar-Ilan University.
  4. McKenzie, David, 2007. "Paper Walls Are Easier to Tear Down: Passport Costs and Legal Barriers to Emigration," World Development, Elsevier, vol. 35(11), pages 2026-2039, November.
  5. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc.
  6. David Mckenzie & Hillel Rapoport, 2004. "Network Effects and the Dynamics of Migration and Inequality: Theory and Evidence from Mexico," Working Papers 2004-3, Department of Economics, Bar-Ilan University.
  7. Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
  8. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
  9. Alberto Chong, 2001. "Inequality, Democracy, and Persistence: Is There a Political Kuznets Curve?," Research Department Publications 4253, Inter-American Development Bank, Research Department.
  10. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September.
  11. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
  12. 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.
  13. Taylor, J. Edward, 1992. "Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects," Journal of Policy Modeling, Elsevier, vol. 14(2), pages 187-208, April.
  14. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  15. Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
  16. Chong, Alberto & León, Gianmarco, 2008. "Barriers to exit," Economics Letters, Elsevier, vol. 99(1), pages 93-97, April.
  17. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September.
  18. Milanovic, Branko & DEC, 1994. "Determinants of cross-country income inequality : an augmented Kuznets hypothesis," Policy Research Working Paper Series 1246, The World Bank.
  19. Yves Bourdet & Hans Falck, 2006. "Emigrants' remittances and Dutch Disease in Cape Verde," International Economic Journal, Taylor & Francis Journals, vol. 20(3), pages 267-284.
  20. Chong, Alberto & Calderon, Cesar, 2000. "Institutional Quality and Income Distribution," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 761-86, July.
  21. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  22. Papanek, Gustav F. & Kyn, Oldrich, 1986. "The effect on income distribution of development, the growth rate and economic strategy," Journal of Development Economics, Elsevier, vol. 23(1), pages 55-65, September.
  23. Ma. Cecilia Calderón & Alberto Chong, 2006. "Does Foreign Aid Help Reduce Income Inequality?," Research Department Publications 4437, Inter-American Development Bank, Research Department.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Alassane DRABO & Christian EBEKE, 2010. "Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries," Working Papers 201004, CERDI.
  2. Ambrosius, Christian, 2011. "Are Remittances a 'Catalyst' for Financial Access? Evidence from Mexico," Proceedings of the German Development Economics Conference, Berlin 2011 5, Verein für Socialpolitik, Research Committee Development Economics.
  3. Sanjeev Gupta & Catherine A. Pattillo & Smita Wagh, 2007. "Impact of Remittanceson Poverty and Financial Development in Sub-Saharan Africa," IMF Working Papers 07/38, International Monetary Fund.
  4. Christian Ebeke, 2011. "The power of Remittances on the Prevalence of Child Labor," Working Papers halshs-00554258, HAL.
  5. Mazhar MUGHAL & Amar Iqbal ANWAR, 2012. "Remittances, Inequality and Poverty in Pakistan: Macro and Microeconomic Evidence," Working Papers 2012-2013_2, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Aug 2012.
  6. Christian Ebeke, 2011. "Transferts des migrants, ouverture sur l'extérieur et dépenses publiques dans les pays en développement," Working Papers halshs-00552983, HAL.
  7. Shahbaz, Muhammad & Ur Rehman, Ijaz & Ahmad Mahdzan, Nurul Shahnaz, 2013. "Linkages between Income Inequality, International Remittances and Economic Growth in Pakistan," MPRA Paper 45577, University Library of Munich, Germany, revised 20 Mar 2013.
  8. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
  9. Rafael Domínguez Martín, 2009. "Migraciones, Desigualdad y Desarrollo en los Estados de México," Documentos de trabajo sobre cooperación y desarrollo 200902, Cátedra de Cooperación Internacional y con Iberoamérica (COIBA), Universidad de Cantabria.
  10. Simeon Karafolas & Nikolaos Sariannidis, 2009. "The Banking Network as a Transmission Channel of Migrant Remittances: The Case of Greek and Italian Banks in Albania," Transition Studies Review, Springer, vol. 15(4), pages 674-684, February.
  11. Gupta, Sanjeev & Pattillo, Catherine A. & Wagh, Smita, 2009. "Effect of Remittances on Poverty and Financial Development in Sub-Saharan Africa," World Development, Elsevier, vol. 37(1), pages 104-115, January.
  12. TCHAMANBÉ DJINÉ Louise, TDL & MIAMO WENDJI Clovis, MWC, 2012. "Transferts Financiers des Migrants et développement en Afrique subsaharienne," MPRA Paper 38139, University Library of Munich, Germany.
  13. repec:hal:journl:halshs-00587797 is not listed on IDEAS
  14. Simeon Karafolas & George Konteos, 2010. "Choice of Money Transfer Methods in the Case of Albanian Immigrants in Greece," Transition Studies Review, Springer, vol. 16(4), pages 962-978, February.
  15. Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn, 2009. "Remittances and economic growth in Latin America and the Caribbean: The Impact of the human capital development," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46751, Southern Agricultural Economics Association.
  16. Filiz Garip, 2012. "Repeat Migration and Remittances as Mechanisms for Wealth Inequality in 119 Communities From the Mexican Migration Project Data," Demography, Springer, vol. 49(4), pages 1335-1360, November.
  17. Filiz Garip, 2014. "The Impact of Migration and Remittances on Wealth Accumulation and Distribution in Rural Thailand," Demography, Springer, vol. 51(2), pages 673-698, April.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:idb:wpaper:4475. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Bazan).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.