The Impact of International Remittances on Income, Work Efforts, Poverty and Inequality: Evidence from Vietnam

Nguyen, Cuong and van den Berg, Marrit and Lensink, Robert (2009): The Impact of International Remittances on Income, Work Efforts, Poverty and Inequality: Evidence from Vietnam.

Abstract

This study provides new empirical evidence on the impact of international remittances. Using data from the two most recent Vietnam Household and Living Standard Surveys, the paper estimates the effect of remittances on per capita income, per capita expenditure, work efforts, poverty and inequality. The estimates suggest that a rise in international remittances in Vietnam increases household income and expenditure. Yet, the study also finds evidence that international remittances may create a moral hazard problem by inducing disincentives to work. Moreover, the study suggests that international remittances, at the least in the short run, do not reduce poverty. They may even lead to an increase in inequality. Overall, the study casts doubts on the view that international remittances may play a crucial role in reducing poverty in developing countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances, poverty, expenditure, income, household survey, Vietnam
• Subjects: F - International Economics > F3 - International Finance; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development

References

Acosta, P (2007). What is the Impact of International Remittances on Poverty and Inequality in Latin America?. World Bank Policy Research Working Paper 4249, The World Bank: Washington DC.

Adams, R., & Page, J. (2005). Do International Migration and Remittances Reduce Poverty in Developing Countries?. World Development, 33, 1645-1669.

Adams, R. (2006). International Remittances and the Household Analysis and Review of Global Evidence. Journal of African Economies, 15(2), 396-426.

Adams, R., A. Cuecuecha, and J. Page (2008), The Impact of Remittances on Poverty and Inequality in Ghana, World Bank Policy Research Working Paper 4732, The World Bank: Washington DC.

Anyanwu, J.C., and A.E.O. Erhijakpor (ud), Do International Remittances Affect Poverty in Africa?

Azam, J. P., & Flore, G. (2006). Migrants’ Remittances and the Household in Africa: A Review of Evidence. Journal of African Economies, 15(2), 426-462.

Bugamelli, M., & Paterno, F. (2005). Do Workers’ Remittances Reduce The Probability of Current Account Reversals?. Policy Research Working Paper, No. 3766. The World Bank: Washington DC.

Cattaneo, C. (2005), International Migration and Poverty: Cross-Country Analysis.

Cox, D., Eser, Z., & Jimenez, F. (1998). Motives for Private Transfers over the Life Cycle: an Analytical Framework and Evidence for Peru. Journal of Development Economics, 55, 57-80.

Cox, E. A., & Ureta, M. (2003). International Migration, Remittances and Schooling: Evidence from El Salvador. Journal of Development Economics, 72, 429-61.

Chami, R., Fullenkamp, C., & Jahjah, S. (2003). Are Immigrants Remittance Flows A Source of Capital for Development?. International Monetary Fund Working Paper, WP/03/189. International Monetary Fund: Washington DC.

Cordova, E., & Olmedo, A. (2006). International Remittances and Development: Existing Evidence, Policies and Recommendations. INTAL/ITD Occasional Paper No. 41.

De Vasconcelos, P. (2005). Improving the Development Impact of Remittances. Paper presented at United Nations Expert Group Meeting on International Migration and Development, 6-8 July, 2005.

Deaton, A. (1997). The Analysis of Household Surveys. The Johns Hopkins University Press: Baltimore, Maryland, U.S.A.

Nguyen, V. C. (2008). Do Foreign Remittances Matter to Poverty and Inequality? Evidence from Vietnam. Economics Bulletin, Vol. 15, No. 1 pp. 1-11

Niimi, Y., Pham, T.H., & Reilly, B. (2008). Determinants of Remittances: Recent Evidence Using Data on Internal Determinants in Vietnam. Policy Research Working Paper 4586. The World Bank: Washington DC.

Orozco, M. & Fedewa, R. (2005). Leveraging Efforts on Remittances and Financial Intermediation. Report Commissioned by the Inter American Development Bank.

Phuong, N.T., Tam, T.N.T.M., Nguyet, N.T., & Oostendorp, R. (2008). Determinants and Impacts of Migration in Vietnam. DEPOCEN Working Paper Series No. 2008/01.

Ratha, D., & Shaw, W. (2007). South-South Migration and Remittances. World Bank Working Paper No. 102. The World Bank: Washington DC.

Rodriguez, E.R. (1996). International Migrants’ Remittances in the Philippines. Canadian Journal of Economics, 29, 427-32.

Rapoport, H., & Docquier, F. (2005). The Economics of Migrants’ Remittances. IZA Discussion Paper No. 1531.

Solimano, A. (2003). Remittances by Emigrants: Issues and Evidence. Presented at WIDER conference Innovative Sources for Development Finance, Helsinki, May 17-18, 2003.

Stahl, C. (1982), Labour Migration and Economic Development, International Migration Review, 16, 868-899.

Stahl, C.W., & Arnold, F. (1986). Overseas Workers’ Remittances in Asian Development. International Migration Review, 20, 899-925.

Vietnamese Academy of Social Sciences (2007). Vietnam Poverty Update Report. Poverty and Poverty Reduction in Vietnam 1993 – 2004. National Political Publisher: Hanoi.

World Bank (2005a). World Development Indicators 2005. Washington D.C.: World Bank.

World Bank (2005b). Global Economic Prospects Report 2006: Economic Implications of Remittances and Migration. World Bank: Washington DC.

World Bank (2008), Migration and Remittances Factbook, 2008. World Bank: Washington DC.