Remittances and Poverty: Panel Evidence from High Remittance Economies
AbstractThe growth effects of remittances are controversial, but their welfare effects are less so. This paper provides evidence on the effect of remittances on poverty in an unbalanced panel of 40 high remittances economies. The endogeneity issue, driven by the possibility that remittances and poverty may have bidirectional causality, is tackled by a system estimation technique using the seemingly unrelated regression estimator (SURE) that not only allows both to be jointly determined but also allows the error terms of the simultaneous equations to be contemporaneously correlated. Using bootstraps, heteroskedasticty robust standard errors of the SURE regressions are reported and the estimates show that remittances significantly reduce poverty. On the other hand, remittances decline with the wake of widespread poverty. There is consistent evidence that remittances also decline with increases in health index of the general population. However, improvements in the health outcomes of poor people are associated with more remittances. Finally, there is some limited evidence that remittances rise with increases in educational attainments of the general population, but fall as the poor people become more educated.
Download InfoIf 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.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26445.
Date of creation: 31 Oct 2010
Date of revision:
Remittances; Poverty; Panel Data; Seemingly Unrelated Regression (SURE).;
Find related papers by JEL classification:
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-13 (All new papers)
- NEP-DEV-2010-11-13 (Development)
- NEP-MIG-2010-11-13 (Economics of Human Migration)
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.:
- Richard H. Adams, 2006.
"International Remittances and the Household: Analysis and Review of Global Evidence,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 15(2), pages 396-425, December.
- Adams, Richard H. Jr., 2007. "International remittances and the household : analysis and review of global evidence," Policy Research Working Paper Series 4116, The World Bank.
- Giuliano, Paola & Ruiz-Arranz, Marta, 2006.
"Remittances, Financial Development, and Growth,"
IZA Discussion Papers
2160, Institute for the Study of Labor (IZA).
- Aggarwal, Reena & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2006. "Do workers'remittances promote financial development ?," Policy Research Working Paper Series 3957, The World Bank.
- Ravallion, Martin, 1997.
"Can high-inequality developing countries escape absolute poverty?,"
Policy Research Working Paper Series
1775, The World Bank.
- Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September.
- Ravallion, Martin & Shaohua Chen, 1996.
"What can new survey data tell us about recent changes in distribution and poverty?,"
Policy Research Working Paper Series
1694, The World Bank.
- Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-82, May.
- Ramey, Garey & Ramey, Valerie A, 1995.
"Cross-Country Evidence on the Link between Volatility and Growth,"
American Economic Review,
American Economic Association, vol. 85(5), pages 1138-51, December.
- Garey Ramey & Valerie A. Ramey, 1994. "Cross-Country Evidence on the Link Between Volatility and Growth," NBER Working Papers 4959, National Bureau of Economic Research, Inc.
- Lopez, Humberto & Molina, Luis & Bussolo, Maurizio, 2007. "Remittances and the real exchange rate," Policy Research Working Paper Series 4213, The World Bank.
- 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.
- David J. McKenzie & Nicole Hildebrandt, 2005.
"The Effects of Migration on Child Health in Mexico,"
Journal of LACEA Economia,
LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Hildebrandt, Nicole & McKenzie, David, 2005. "The effects of migration on child health in Mexico," Policy Research Working Paper Series 3573, The World Bank.
- Hnatkovska, Viktoria & Loayza, Norman, 2004. "Volatility and growth," Policy Research Working Paper Series 3184, The World Bank.
- Michael T. Gapen & Ralph Chami & Peter Montiel & Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers' Remittances Promote Economic Growth?," IMF Working Papers 09/153, International Monetary Fund.
- 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.
- 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.
- Christopher F Baum, 2001. "Residual diagnostics for cross-section time series regression models," Stata Journal, StataCorp LP, vol. 1(1), pages 101-104, November.
- 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.
- Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
- Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.