Remittances, Poverty And Inequality
This paper explores the effect of remittances across the distribution of income. Based on a panel of 46 countries that covers the period between 1970 and 2000, we find that the effect of remittances is non-monotone across the distribution of income and strongest in low income countries. The impact of remittances is positive and decreasing in income for the bottom 70 percent of the population, and negative and increasing in income in the top 20 percent of the population. All else equal, remittances decrease inequality as their effect is mostly felt among the poor and they are negatively related to the income of the rich. We estimate that for low income countries a 1 percent increase in remittances would increase the first decile¡¯s income by approximately 0.43 percent, while the same change would increase the seventh decile¡¯s income by only 0.04 percent. In contrast, a 1 percent increase in remittances is associated with a 0.10 percent decrease in the income of the top 10 percent of the population.
Volume (Year): 34 (2009)
Issue (Month): 1 (June)
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- Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
- David Mckenzie & Hillel Rapoport, 2004.
"Network Effects and the Dynamics of Migration and Inequality: Theory and Evidence from Mexico,"
2004-3, Bar-Ilan University, Department of Economics.
- Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
- 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.
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