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Remittances and poverty in Guatemala

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  • Adams, Richard H. Jr.

Abstract

The author uses a large, nationally representative household survey to analyze the impact of internal remittances (from Guatemala), and international remittances (from the United States) on poverty in Guatemala. With only one exception, he finds that both internal and international remittances reduce the level, depth, and severity of poverty in Guatemala. However, he finds that remittances have a greater impact on reducing the severity as opposed to the level of poverty in Guatemala. For example, the squared poverty gap-which measures the severity of poverty-falls by 21.1 percent when internal remittances are included in household income, and by 19.8 percent when international remittances are included in such income. This is true because households in the lowest decile group receive a very large share of their total household income (expenditure) from remittances. Households in the bottom decile group receive between 50 and 60 percent of their total income (expenditure) from remittances. When these"poorest of the poor"households receive remittances, their income status changes dramatically and this in turn has a large effect on any poverty measure-like the squared poverty gap-that considers the number, distance, and distribution of poor households beneath the poverty line.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3418.

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Date of creation: 01 Sep 2004
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Handle: RePEc:wbk:wbrwps:3418

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Keywords: Housing&Human Habitats; Services&Transfers to Poor; Environmental Economics&Policies; Economic Conditions and Volatility; Health Economics&Finance; Poverty Lines; VN-Acb Mis -- IFC-00535908; Safety Nets and Transfers; Economic Conditions and Volatility; PovertyAssessment;

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  1. Glewwe, Paul & Jacoby, Hanan G., 2004. "Economic growth and the demand for education: is there a wealth effect?," Journal of Development Economics, Elsevier, vol. 74(1), pages 33-51, June.
  2. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 96(383), pages 722-40, September.
  3. World Bank, 2004. "Poverty in Guatemala," World Bank Publications, The World Bank, number 15066.
  4. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
  5. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
  6. Adams, Richard H, Jr, 1998. "Remittances, Investment, and Rural Asset Accumulation in Pakistan," Economic Development and Cultural Change, University of Chicago Press, vol. 47(1), pages 155-73, October.
  7. Richard H. Adams, Jr., 1992. "The Effects of Migration and Remittances on Inequality in Rural Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 31(4), pages 1189-1206.
  8. Adams, Richard H. Jr. & He, Jane J., 1995. "Sources of income inequality and poverty in rural Pakistan:," Research reports 102, International Food Policy Research Institute (IFPRI).
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