| Summary: | In this dissertation we examine the impact of steadily growing remittance flows
to the developing world. We analyze the latest data sets available on international remittances, inequality, and poverty while we making use of a panel data
set including 89 selected developing countries in the period of 1996-2017. Fixed
effects estimation model with clustered standard errors is adopted to estimate the
poverty effects of remittances. Our estimations indicate a negative but statistically
insignificant impact of remittances on each of the three poverty measures (poverty
headcount, poverty gap, poverty severity). Accounting for the possible endogeneity of international remittances, by adopting a two-stage least squares as well as
a three-stage least squares estimations, our results indicate that a 10% increase
of remittances as a share of GDP will lead to 1.9% decline in poverty headcount
ratio and 2% decline in poverty gap and severity, all at equal levels of significance.
A separate analysis has been undertaken for 60 developing countries that have 2%
or more share of remittances in GDP. Our results even after accounting for the
endogeneity issue, are more reliable while the impact of remittances on poverty
alleviation found to be stronger and more significant.
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