Do Remittances Reduce Poverty in Developing Countries?
Workers’ remittances represent a lifeline for the poor, increasing income for the families left behind. They represent an important link for the study of the impact of international migration in both origin and destination countries. This paper examines the effects of remittances on poverty in Poland, Romania, Ukraine and Turkey for the period 2002–2011. The results of the panel data analysis show that per capita official international remittances significantly reduce the level and depth of poverty in the analysed countries. A 10 % increase in per capita workers’ remittances will lead to a 5.3 % decline in the share of people living on less than $2 per person per day. Due to the use of informal channels for transferring money, an important share of remittances is left unrecorded. One possible way for the policymakers to deter the use of informal channels is by further creating incentives for lowering the costs for sending money back home. Also, better data and monitoring could bolster the rate of official remittances.
KeywordsInternational migration Remittances Poverty Panel data model
JEL Classification CodesF22 F24 I32
This paper was co-financed from the European Social Fund, through the Sectorial Operational Programme Human Resources Development 2007–2013, project number POSDRU/159/1.5/S/138907 “Excellence in scientific interdisciplinary research, doctoral and postdoctoral, in the economic, social and medical fields-EXCELIS”, coordinator “The Bucharest University of Economic Studies”.
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