Hassan, Gazi (2010): Remittances and Poverty: Panel Evidence from High Remittance Economies.
Download (1150Kb) | Preview
The growth effects of remittances are controversial, but their welfare effects are less so. This paper provides evidence on the effect of remittances on poverty in an unbalanced panel of 40 high remittances economies. The endogeneity issue, driven by the possibility that remittances and poverty may have bidirectional causality, is tackled by a system estimation technique using the seemingly unrelated regression estimator (SURE) that not only allows both to be jointly determined but also allows the error terms of the simultaneous equations to be contemporaneously correlated. Using bootstraps, heteroskedasticty robust standard errors of the SURE regressions are reported and the estimates show that remittances significantly reduce poverty. On the other hand, remittances decline with the wake of widespread poverty. There is consistent evidence that remittances also decline with increases in health index of the general population. However, improvements in the health outcomes of poor people are associated with more remittances. Finally, there is some limited evidence that remittances rise with increases in educational attainments of the general population, but fall as the poor people become more educated.
|Item Type:||MPRA Paper|
|Original Title:||Remittances and Poverty: Panel Evidence from High Remittance Economies|
|Keywords:||Remittances, Poverty, Panel Data, Seemingly Unrelated Regression (SURE).|
|Subjects:||C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models; Multiple Variables > C33 - Models with Panel Data; Longitudinal Data; Spatial Time Series
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I32 - Measurement and Analysis of Poverty
|Depositing User:||Gazi M. Hassan|
|Date Deposited:||07. Nov 2010 05:57|
|Last Modified:||11. Feb 2013 18:47|
Acosta, P., Lartey, E., and F. Mandelman (2007). ‘Remittances and the Dutch Disease’ Federal Reserve Bank of Atlanta.
Adams, R.H. (2006) ‘International Remittances and Household: Analysis and Review of Global Evidence’, Journal of African Economies, Vol 15, AERC Supplement 2: 396-425.
Adams, R. (2004) ‘Remittances and Poverty in Guatemala’, World Bank Policy Research Working Paper No. 3418, Washington: World Bank.
Adams, R.H. and J. Page (2005) ‘Do International Migration and Remittances Reduce Poverty in Developing Countries?’, World Development, Vol 33 (10): 1645-1669.
Aggarwal, R., Demirguc-Kunt, A. and M. Peria (2006). ‘Do Workers’ Remittances Promote Financial Development?’ World Bank Policy Research Working Paper, Washington, D.C.
Amuedo-Dorantes, C., and S. Pozo (2004). ‘Workers’ Remittances and the Real Exchange Rate: A Paradox of Gifts.’ World Development, 32(8): 1407-1417.
Anyanwu, J. And A. Erhijakpor (2010) ‘Do International Remittances Affect Poverty in Africa?’ African Development Review, Vol 22, (1): 51-91.
Barajas, A., R. Chami, C. Fullenkamp, M. Gapen and P. Montiel (2009) ‘Do Workers’ Remittances Promote Economic Growth?’ International Monetary Fund, Washington, D.C.
Baum, C. (2001) ‘Residual Diagnostics for Cross-Section Time Series Regression Models’, The Stata Journal, 1 (1): 101 – 104.
Chami, R., A. Barajas, T. Cosimano, C. Fullenkamp, C., M. Gapen and P. Montiel (2008) ‘Macroeconomic Consequences of Remittances’, International Monetary Fund Occasional Paper No. 259. Washington, D.C.
Cox Edwards, A. and M. Ureta (2003) ‘International Migration, Remittances and Schooling: Evidence from El Salvatdor’, Journal of Development Economics, 72 (2): 429-61.
Frank, R. And R. Hummer (2002) ‘The Other Side of the Paradox: The Risk of Low Birth Weight among Infants of Migrant and Non-migrant Households within Mexico’, International Migration Review, 36: 746-765.
Giuliano, P., and M. Ruiz-Arranz (2009). ‘Remittances, Financial Development, and Growth’, Journal of Development Economics, 90 (2): 144-152.
Gupta, S., C. Pattillo and S. Wagh (2009) ‘Effect of Remittances on Poverty and Financial Development in Sub-Saharan Africa’, World Development, 37 (1 ): 104-115.
Hanson, G.H. and C. Woodruff (2003), ‘Emigration and Education Attainment in Mexico’, University of California, Riverside, mimeo.
Hildebrant, N. And D. McKenzie (2005) ‘The Effect of Migration on Child Health in Mexico’, Department of Economics, Stanford University, and World Bank Policy Research Working Paper 3573.
Hnatkovska, V., and N. Loayza (2003). ‘Volatility and Growth’, World Bank Working Paper No. WPS3184, Washington D.C.
International Monetary Fund (2005) ‘Two Current Issues Facing Developing Countries’, World Economic Outlook, April 2005: Globalization and External Imbalances. Washington D.C., World Economic and Financial Surveys.
Jongwanich, J. (2007) ‘Workers’ Remittances, Economic Growth and Poverty in Developing Asia and the Pacific Countries’, UNESCAP Working Paper No. WP/07/01.
Kroft, K., and H. Lloyd-Ellis (2002) ‘Further Cross-Country Evidence on the Link Between Growth, Volatility and Business Cycles’, Queens University, Department of Economic, Working Paper.
Lartey, E., Mandelman, F. and P. Acosta (2008) ‘Remittances, Exchange Rate Regimes, and the Dutch Disease: A Panel Data Analysis’, Federal Reserve Bank of Atlanta Working Paper 2008-12, Atlanta.
Lopez, H., Molina, L. and Bussolo, M. (2007) ‘Remittances and Real Exchange Rate’ World Bank Policy Research Working Paper 4213, Washington: D.C.
Page, J. And S. Plaza (2006) ‘Migration Remittances and Development: A Review of Global Evidence’, Journal of African Economies, Vol 00, AERC Supplement 2: 245-336
Quarterly, P. And T. Blankson (2004) ‘Do Migrant Remittances Minimize the Impact of Macro-Volatility on the Poor in Ghana’, Global Development Network (GDN).
Ramey, G., and V. A. Ramey (1995). ‘Cross-Country Evidence on the Link Between Volatility and Growth.’ American Economic Review, 85(5): 1138 – 1151.
Ravallion, M. (1997) ‘Can High-Inequality Developing Countries Escape Absolute Poverty?’ Economics Letters, 56, 51 – 57.
Ravallion, M. And S. Chen (1997) ‘What Can New Survey Data Tell Us About Recent Changes in Distribution and Poverty?’ World Bank Economic Review, 11, 357-382.
World Bank (2006) The Development Impact of Workers’ Remittances in Latin America, Vol. 2: Detailed Findings (Chapter 3, Section V), Report No. 37026, Washington D.C.
World Bank (2008) Remittances and Development: Lessons from Latin America, Fajnzylber, P. and J.H. Lopez (Eds), Washington, D.C.
Yang, D. (2003) ‘Financing Constraints, Economic Shocks, and International Labor Migration: Understanding the Departure and Return of Philippine Overseas Workers’, Harvard University, Dissertation Chapter.