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Do remittances alleviate poverty and income inequality in poor countries? Empirical evidence from sub-Saharan Africa

Deodat Adenutsi

MPRA Paper from University Library of Munich, Germany

Abstract: An attempt has been made in this paper to examine the impact of international remittances on poverty and income inequality in sub-Saharan Africa (SSA). In carrying out the study, 34 SSA countries for which relevant data are available, between 1980 and 2009, were sampled for the poverty analysis whilst a sample size of 36 was used in the remittances-income inequality exploration. A set of dynamic panel-data models was estimated using system Generalized Method of Moments. It was found that remittances have significant poverty-alleviating effect, with the poorest of the poor being the least beneficiaries. Additionally, International remittances have income equalisation effects in countries with relatively narrower income gap, but with an intensifying income-inequality aggravating effects in countries with relatively wider income gap. It is, thus, concluded that although remittances have huge potentials to alleviate poverty and equilibrate incomes in SSA, these remittances have size-effects to the detriment of relatively poorer countries and countries with relatively higher income gap. Therefore, the paper recommends that, although the poverty-alleviating effects and income equalisation effects of remittances cannot be downplayed, it is imprudent for SSA policymakers to overly exclusively on remittances as a poverty-reduction strategy towards sustainable socioeconomic development of the sub-region.

Keywords: Remittances; Poverty; Inequality; Developing Countries; system GMM; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: C33 D63 F22 F24 I3 N37 O15 (search for similar items in EconPapers)
Date: 2011-09-14
New Economics Papers: this item is included in nep-afr, nep-dev and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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