Remittance inflows and poverty dynamics in South Africa: An empirical investigation

Mercy T Musakwa and Nicholas Odhiambo

No 25750, Working Papers from University of South Africa, Department of Economics

Abstract: In this study, we investigate the impact of remittance inflows on poverty reduction in South Africa, usingtime series data from 1980 to 2017. The main objective of this study is to establish if South Africa canharness remittance inflows to alleviate poverty. Two poverty proxies, namely household consumptionexpenditure and infant mortality are used in this study. To ensure robustness of the results, both incomeand non-income proxies of poverty are employed. Using the autoregressive distributed lag (ARDL) boundapproach, the study found that remittance has a negative impact on poverty in the short run and in the longrun when household consumption expenditure is used as a proxy for poverty. However, when infantmortality rate is used as a proxy, remittance is found to have no impact on poverty. It can be concludedthat the impact of remittance on poverty is sensitive to the proxy used. The study concludes that South Africacould benefit immensely from some forms of remittances in its quest to poverty alleviation.

Keywords: Remittance; poverty reduction; autoregressive distributed lag (ARDL); household consumption expenditure; infant mortality rate; South Africa (search for similar items in EconPapers)
Date: 2019-08
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Journal Article: Remittance Inflows and Poverty Dynamics in South Africa: An Empirical Investigation (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:uza:wpaper:25750

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