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International Remittances and Income Inequality: An Empirical Investigation


  • Valerie Koechlin
  • Gianmarco Leon


Using several cross-sectional and panel data methodologies, this paper provides evidence of the existence of an inverted U-shaped relationship between international remittances and income inequality in a cross section of 78 countries. Our analysis supports previous theoretical work that describes how, at the first stages of migration history, there is an inequality-increasing effect of remittances on income inequality. Then, as the opportunity cost of migrating decreases due to this effect, remittances tend to lower inequality. We also show how education and the development of the financial sector can help countries reach faster the inequality-decreasing section of the curve.

Suggested Citation

  • Valerie Koechlin & Gianmarco Leon, 2007. "International Remittances and Income Inequality: An Empirical Investigation," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 10(2), pages 123-141.
  • Handle: RePEc:taf:jpolrf:v:10:y:2007:i:2:p:123-141 DOI: 10.1080/17487870701346514

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    References listed on IDEAS

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    Cited by:

    1. Ambrosius, Christian & Cuecuecha, Alfredo, 2014. "Do remittances increase borrowing?," Discussion Papers 2014/19, Free University Berlin, School of Business & Economics.
    2. Muhammad Shahbaz & Ijaz Rehman & Nurul Mahdzan, 2014. "Linkages between income inequality, international remittances and economic growth in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1511-1535, May.
    3. Mazhar Yasin MUGHAL & Amar Iqbal ANWAR, 2012. "Remittances, inequality and poverty in Pakistan: macro and microeconomic Evidence," Working Papers 2012-2013_2, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Aug 2012.
    4. Alassane DRABO & Christian EBEKE, 2010. "Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries," Working Papers 201004, CERDI.
    5. Christian EBEKE, 2010. "Transferts des migrants, ouverture sur l'extérieur et dépenses publiques dans les pays en développement," Working Papers 201011, CERDI.
    6. Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn, 2009. "Remittances and economic growth in Latin America and the Caribbean: The Impact of the human capital development," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46751, Southern Agricultural Economics Association.
    7. Jean-Louis Combes & Christian Hubert Ebeke & Mathilde Maurel & Thierry Yogo, 2011. "Remittances and the Prevalence of Working Poor," Working Papers halshs-00585004, HAL.
    8. Ambrosius, Christian & Cuecuecha, Alfredo, 2016. "Remittances and the Use of Formal and Informal Financial Services," World Development, Elsevier, vol. 77(C), pages 80-98.
    9. Ambrosius, Christian, 2011. "Are Remittances a 'Catalyst' for Financial Access? Evidence from Mexico," Proceedings of the German Development Economics Conference, Berlin 2011 5, Verein für Socialpolitik, Research Committee Development Economics.
    10. Simeon Karafolas & Nikolaos Sariannidis, 2009. "The Banking Network as a Transmission Channel of Migrant Remittances: The Case of Greek and Italian Banks in Albania," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 15(4), pages 674-684, February.
    11. Simeon Karafolas & George Konteos, 2010. "Choice of Money Transfer Methods in the Case of Albanian Immigrants in Greece," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(4), pages 962-978, February.
    12. Maëlan LE GOFF & Christian EBEKE, 2009. "Why Migrants' Remittances Reduce Income Inequality in some Countries and not in Others?," Working Papers 200919, CERDI.
    13. Ebeke, Christian Hubert, 2012. "The power of remittances on the international prevalence of child labor," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 452-462.
    14. Elias K Shukralla, 2016. "Remittances, institutions and economic growth: a closer look at some proxies for institutions," Economics Bulletin, AccessEcon, vol. 36(1), pages 298-312.
    15. Sanjeev Gupta & Catherine A Pattillo & Smita Wagh, 2007. "Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa," IMF Working Papers 07/38, International Monetary Fund.
    16. Filiz Garip, 2012. "Repeat Migration and Remittances as Mechanisms for Wealth Inequality in 119 Communities From the Mexican Migration Project Data," Demography, Springer;Population Association of America (PAA), vol. 49(4), pages 1335-1360, November.
    17. 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.
    18. repec:taf:oxdevs:v:44:y:2016:i:4:p:458-478 is not listed on IDEAS
    19. Filiz Garip, 2014. "The Impact of Migration and Remittances on Wealth Accumulation and Distribution in Rural Thailand," Demography, Springer;Population Association of America (PAA), vol. 51(2), pages 673-698, April.
    20. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
    21. Rafael Domínguez Martín, 2009. "Migraciones, Desigualdad y Desarrollo en los Estados de México," Documentos de trabajo sobre cooperación y desarrollo 200902, Cátedra de Cooperación Internacional y con Iberoamérica (COIBA), Universidad de Cantabria.
    22. Bang, James T. & Mitra, Aniruddha & Wunnava, Phanindra V., 2016. "Do remittances improve income inequality? An instrumental variable quantile analysis of the Kenyan case," Economic Modelling, Elsevier, vol. 58(C), pages 394-402.
    23. TCHAMANBÉ DJINÉ Louise, TDL & MIAMO WENDJI Clovis, MWC, 2012. "Transferts Financiers des Migrants et développement en Afrique subsaharienne," MPRA Paper 38139, University Library of Munich, Germany.


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