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Assessing the poverty impacts of remittances with alternative counterfactual income estimates

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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File URL: http://www.uq.edu.au/economics/abstract/375.pdf
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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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