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Assessing the poverty impacts of remittances with alternative counterfactual income estimates

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Author Info
Eliana V. Jimenez
Richard P.C. Brown (School of Economics, The University of Queensland)

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Abstract

We estimate the impacts of remittances on poverty with survey data from Tonga, a poor Pacific island country highly dependent on international migrants’ remittances. The sensitivity of poverty impacts to estimation method is tested using two methods to estimate migrants’ counterfactual incomes; bootstrap prediction with self-selection testing and propensity score matching. We find consistency between the two methods, both showing a substantial reduction in the incidence and depth of poverty with migration and remittances. With further robustness checks there is strong evidence that the poorest households benefit from migrants’ remittances, and that increased migration opportunities can contribute to poverty alleviation.

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Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 375.

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Date of creation: 2008
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Handle: RePEc:qld:uq2004:375

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  1. 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. [Downloadable!] (restricted)
  2. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001. [Downloadable!]
  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. [Downloadable!]
  4. Morduch, Jonathan & Sharma, Manohar, 2001. "Strengthening public safety nets," FCND briefs 122, International Food Policy Research Institute (IFPRI). [Downloadable!]
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  5. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
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  6. Rodriguez, Edgard R, 1998. "International Migration and Income Distribution in the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 46(2), pages 329-50, January.
  7. David McKenzie & John Gibson & Steven Stillman, 2006. "How Important Is Selection? Experimental vs. Non-Experimental Measures of the Income Gains from Migration," IZA Discussion Papers 2087, Institute for the Study of Labor (IZA). [Downloadable!]
  8. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer, vol. 18(2), pages 229-260, 06. [Downloadable!] (restricted)
  9. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February. [Downloadable!] (restricted)
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  10. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 605-54, October. [Downloadable!] (restricted)
  11. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353. [Downloadable!] (restricted)
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  12. Adams, Richard H., Jr. & Cuecuecha, Alfredo & Page, John, 2008. "Remittances, consumption and investment in Ghana," Policy Research Working Paper Series 4515, The World Bank. [Downloadable!]
  13. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November. [Downloadable!]
  14. 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.
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