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Remittances and poverty in Ghana

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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 Ghana) and international remittances (from African and other countries) on poverty in Ghana. With only one exception, he finds that both types of remittances reduce the level, depth, and severity of poverty in Ghana. But the size of the poverty reduction depends on how poverty is being measured. The author finds that poverty is reduced more when international, as opposed to internal, remittances are included in household income, and when poverty is measured by the more sensitive poverty measures-poverty gap and squared poverty gap. For example, the squared poverty gap measure shows that including international remittances in household expenditure (income) reduces the severity of poverty by 34.8 percent, while including internal remittances in such income reduces the severity of poverty by only 4.1 percent. International remittances reduce the severity of poverty more than internal remittances because of the differential impact of these two types of remittances on poor households. Households in the poorest decile group receive 22.7 percent of their total household expenditure (income) from international remittances, as opposed to only 13.8 percent of such income from internal remittances. When these"poorest of the poor"households receive international 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 both the number and distance 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 3838.

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Date of creation: 01 Feb 2006
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Handle: RePEc:wbk:wbrwps:3838

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Related research

Keywords: Remittances; Economic Conditions and Volatility; Gender and Development; Small Area Estimation Poverty Mapping; Poverty Lines;

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References

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  1. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
  2. Chiswick, Barry R., 2000. "Are Immigrants Favorably Self-Selected? An Economic Analysis," IZA Discussion Papers 131, Institute for the Study of Labor (IZA).
  3. Lanzona, Leonardo A., 1998. "Migration, self-selection and earnings in Philippine rural communities," Journal of Development Economics, Elsevier, vol. 56(1), pages 27-50, June.
  4. Schmertmann, Carl P., 1994. "Selectivity bias correction methods in polychotomous sample selection models," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 101-132.
  5. Adams, Richard H., Jr., 1991. "The effects of international remittances on poverty, inequality, and development in rural Egypt:," Research reports 86, International Food Policy Research Institute (IFPRI).
  6. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
  7. Lipton, Michael, 1980. "Migration from rural areas of poor countries: The impact on rural productivity and income distribution," World Development, Elsevier, vol. 8(1), pages 1-24, January.
  8. Claudia Martínez Alvear & Dean Yang, 2007. "Remittances and Poverty in Migrants’ Home Areas: Evidence from the Philippines," Working Papers wp257, University of Chile, Department of Economics.
  9. Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr. & Lopez-Feldman, Alejandro, 2005. "Remittances, Inequality and Poverty: Evidence from Rural Mexico," Working Papers 60287, University of California, Davis, Department of Agricultural and Resource Economics.
  10. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
  11. 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.
  12. Gustafsson, Bjorn & Makonnen, Negatu, 1993. "Poverty and Remittances in Lesotho," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 2(1), pages 49-73, May.
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Citations

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Cited by:
  1. Anzoategui, Diego & Demirguc-Kunt, Asli & Peria, Maria Soledad Martinez, 2011. "Remittances and financial inclusion : evidence from El Salvador," Policy Research Working Paper Series 5839, The World Bank.
  2. 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.
  3. Lisa Chauvet & Flore Gubert & Sandrine Mesplé-Somps, 2009. "Are Remittances More Effective Than Aid To Reduce Child Mortality? An Empirical Assessment using Inter and Intra-Country Data," Working Papers DT/2009/11, DIAL (Développement, Institutions et Mondialisation).
  4. Adenutsi, Deodat E. & Ahortor, Christian R.K., 2010. "International remittances – the panacea for underdevelopment? A comparative panel data analysis of Sub-Saharan Africa and Latin America," MPRA Paper 29349, University Library of Munich, Germany.
  5. Naiditch, Claire & Vranceanu, Radu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Economic Systems, Elsevier, vol. 33(1), pages 60-82, March.
  6. Laetitia Duval & François-Charles Wolff, 2009. "L'effet des transferts migratoires sur la déforestation dans les pays en développement," Working Papers hal-00421222, HAL.
  7. Maurice Schiff, 2006. "Migration’s Income and Poverty Impact," Working Papers wp227, University of Chile, Department of Economics.
  8. 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.
  9. Fransen, Sonja & Mazzucato, Valentina, 2014. "Remittances and Household Wealth after Conflict: A Case Study on Urban Burundi," World Development, Elsevier, vol. 60(C), pages 57-68.
  10. Adenutsi, Deodat E., 2010. "Do international remittances promote human development in poor countries? Empirical evidence from Sub-Saharan Africa," MPRA Paper 29347, University Library of Munich, Germany.
  11. Francesca Marchetta, 2008. "Migration and non farm activities as income diversification strategies: the case of Northern Ghana," Working Papers - Economics wp2008_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  12. Dimova, Ralitza & Wolff, François-Charles, 2008. "Are private transfers poverty and inequality reducing? Household level evidence from Bulgaria," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 584-598, December.
  13. Aggarwal, Reena & Demirgüç-Kunt, Asli & Pería, Maria Soledad Martínez, 2011. "Do remittances promote financial development?," Journal of Development Economics, Elsevier, vol. 96(2), pages 255-264, November.
  14. Adenutsi, Deodat E., 2009. "Long-run macroeconomic impact of international migrant remittances on human development in low-income countries: A panel analysis of sub-Saharan Africa," MPRA Paper 37115, University Library of Munich, Germany.
  15. Mitrut, Andreea & Wolff, François-Charles, 2011. "Do private and public transfers received affect life satisfaction? Evidence from Romania," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 969-979.
  16. Adenutsi, Deodat E., 2011. "Do remittances alleviate poverty and income inequality in poor countries? Empirical evidence from sub-Saharan Africa," MPRA Paper 37130, University Library of Munich, Germany.

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