The Impact of Remittances on Poverty and Income Inequality in Kenya: An Instrumental-Variable Quantile Regression Analysis

Type Working Paper
Title The Impact of Remittances on Poverty and Income Inequality in Kenya: An Instrumental-Variable Quantile Regression Analysis
Author(s)
Publication (Day/Month/Year) 2015
URL https://www.researchgate.net/profile/James_Bang/publication/260551276_The_Impact_of_Remittances_on_P​overty_and_Income_Inequality_in_Kenya_An_Instrumental-Variable_Quantile_Regression_Analysis/links/0a​85e53188b7ec23db000000.pdf
Abstract
We use the 2009 Kenya Migration Household Survey sponsored by the World Bank and conducted by the University of Nairobi to investigate the impact of remittances on poverty and inequality in per capita household expenditures for Kenya. Standard quantile regression analysis shows that receiving remittances has an unsubstantial and insignificant impact on expenditures by poor households, and larger impacts on expenditures by richer households. This finding is consistent with previous studies that find remittances to alleviate poverty only modestly and to adversely impact income inequality. However, accounting for endogeneity in remittances by using an instrumental quantile regression analysis, we find remittances to have the reverse effect on the distribution of expenditures: The impact of remittances is strongest between the 5th and 15th percentiles. This suggests that remittances benefit poor households more than rich ones, but that unequal access to the opportunity to migrate and send remittances prevents many poor families from realizing these benefits.

Related studies

»