Copyright © 2007 International Development Options
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Volume Four Winter 2006-Spring 2007 Numbers 3-4.
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?
Department of Economics
University of the West Indies
Mona, Kingston, Jamaica.
Published Online: February 10, 2017
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.