International remittances and income inequality: An empirical investigation

Arbeitspapier

The aim of this paper is to provide comprehensive empirical evidence on the relationship between international remittances and income inequality. In simple cross-country regressions we find a non-monotonic link between these two variables when using ordinary least squares, instrumental variables; we also test our hypothesis using dynamic panel data methods. We provide evidence in support of existing theoretical work that accounts for network effects that describe how, in the first stages of migration history, there is an inequality-increasing effect of remittances on income inequality. Then, as the opportunity cost of migrating is lowered due to these effects, remittances sent to those households have a negative impact on inequality. We also show how education and the development of the financial sector can help countries to reach the inequality-decreasing section of the curve more quickly. Our results are robust to several empirical specifications, as well as for a wide variety of inequality measures.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 571

Classification and Topics

• Classification: Wirtschaft ; Economic Development: Human Resources; Human Development; Income Distribution; Migration ; Economics of Gender; Non-labor Discrimination
• Subject: Migration ; International Remittances ; Income distribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koechlin, Valerie ; León, Gianmarco
• Event: Veröffentlichung
• (who): Inter-American Development Bank, Research Department
• (where): Washington, DC
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/51522
• Last update: 10.03.2025, 11:42 AM CET