Reading Development

Random readings on society, politics and change – Jorge Carrillo

The effect of remittances on poverty reduction in Asia

This paper studies the effect of per capita remittances on poverty in 25 labour-sending countries of Asia between 1991 and 2015. The total remittance flows to this region has been steadily rising through the years with countries such as India receiving the highest remittances in the world. This region unfortunately also has the highest concentration of poor in the world and the conclusions of the paper could provide policy recommendations on how migration and remittances could be used as effective developmental tools. The study concludes that international remittance has a poverty mitigating effect. A 10% increase in the per capita remittance can result in the decline of the poverty headcount ratio by 0.4 percentage points. After instrumenting for possible endogeneity of remittance, the effect is even greater with a 10% increase in the per capita remittance leading to a decline of poverty headcount ratio by 0.5 percentage points and the poverty gap by 0.1 percentage points.

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This entry was posted on Tuesday, 20 August 2019 by in Poverty and inequality and tagged , , .
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