| dc.description.abstract | International remittances account for about 2,1% of Colombia's GDP. Even though they are so important in the national accounts, very little has been studied about their effects on poverty and inequality, which tend to be ambiguous in the literature. This study estimates the effect of remittances on both variables for the period 2012-2019, based on data from more than 1,8 million households from Colombia’s official statistics department (DANE). Poverty and inequality indicators were calculated for the observed income (with remittances), without remittances and for an estimated counterfactual income of the recipient households if no member of the household had migrated in the first place. This, was estimated with Heckman’s (1979) two-stage selection model. It was found that remittances, compared to the case without remittances, reduce poverty by -0,19 p.p., extreme poverty by -0,13 p.p. and have no effect on the Gini coefficient. However, when the counterfactual is included, remittances increase poverty by +0,06 p.p., extreme poverty by +0,05 p.p. and the Gini coefficient in +0,002 points. This effect not only is small but also opposite to most of the empirical literature, and raises the necessity for more studies on this topic, however, it concludes that the poorest recipient households would have higher average incomes if they had not migrated in the first place. | |
