Abstract Eight 2007

GLOBAL

DEVELOPMENT STUDIES

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Volume Four Winter 2006-Spring 2007 Numbers 3-4.

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Theme: Global Labor Migration and Emerging Trends in Development Finance: An Assessment of the

Economic and Social Impact of Migrant (Worker) Remittances in Central America and the Caribbean

THE IMPACT OF INTERNATIONAL REMITTANCES ON POVERTY AND INEQUALITY IN JAMAICA:

WHAT IS THE EVIDENCE?

Dillon Alleyne

Department of Economics

University of the West Indies

Mona, Kingston, Jamaica.

Published Online: February 10, 2017

ABSTRACT

Despite the importance of international remittances to the Jamaican economy, no study has systematically examined the impact of remittances on poverty and inequality. This article attempts to fill the void by utilizing data from two nationally administered surveys in 2002 to determine how remittances affect overall poverty and inequality by using such indices as the Gini coefficient, the poverty gap and the squared poverty gap. The methodology employed also improves on the general literature by estimating a simultaneous system through Two Stage Least Squares (2SLS) to estimate income and consumption. This is done in order to predict the level of consumption of remittance receiving and non-receiving households. The results suggest that remittances reduce both the poverty gap and the squared poverty gap with the greater impact being felt in rural areas. The results also show that while remittances reduce the level of poverty in Jamaica the distribution of income is not altered.