The impact of remittances on income inequality constitutes a keenly debated topic in the development literature.
Yet, a consensus still has not evolved on the issue. This paper explores the argument that the adverse distributional
impact of remittances obtained by a number of studies could partially be due to the failure to control for
existing differentials in the ability to migrate. We test the impact of remittances on household expenditures
using data from the Kenyan Migration Household Survey and employing an instrumental variable quantile regression
model to control for the unequal access to migration of rich and poor households. Our results indicate
that while remittances increase household expenditure at all levels of the expenditure distribution, the impact
is unambiguously greatest for poorer households. Hence, remittances, in and of themselves, improve both poverty
and the distribution of income. This suggests that if remittances are to provide an impetus to development,
recipient economies need to alleviate the credit constraints that restrict access to migration for the poor and the
ability to send money home once the access bar has been overcome