The impact of remittances on poverty and inequality in Ghana

Richard Adams (), Alfredo Cuecuecha and John Page

No 4732, Policy Research Working Paper Series from The World Bank

Abstract: This paper uses a new, 2005/06 nationally-representative household survey to analyze the impact of internal remittances (from Ghana) and international remittances (from African and other countries) on poverty and inequality in Ghana. To control for selection and endogeneity, it uses a two-stage multinomial logit model with instrumental variables focusing on variations in migration networks and remittances among various ethno-religious groups in Ghana. The paper finds that both internal and international remittances reduce the level, depth, and severity of poverty in Ghana. However, the size of the poverty reduction depends on the type of remittances received. In general, poverty in Ghana is reduced more by international than internal remittances. For households receiving international remittances, the level of poverty falls by 88.1 percent with the inclusion of remittances; for households receiving internal remittances, poverty falls by 69.4 percent with the inclusion of remittances. The paper also finds that both types of remittances increase income inequality in Ghana. For households with internal remittances, the inclusion of remittances causes the Gini coefficient to rise by 4 percent, and for households with international remittances, the inclusion of remittances causes the Gini to increase by 17.4 percent.

Keywords: Educational Sciences; Poverty Reduction Strategies; Economics and Gender; Gender and Poverty; Gender and Economic Policy; Financial Structures; Inequality; Gender and Economics; Remittances (search for similar items in EconPapers)
Date: 2008-09-01
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Citations: View citations in EconPapers (47)

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