The Impact of Remittances on Poverty and Human Capital: Evidence from Latin American Household Surveys

This paper explores the impact of remittances on poverty, education, and health in eleven Latin American countries using nationally representative household surveys and making an explicit attempt to account for one of the inherent costs associated with migration: the potential income that the migrant may have made at home. The paper states that:

• According to development practitioners, remittances support the development efforts of recipient countries;
• However, these potential positive impacts may be counter-balanced by other, more challenging effects;
• Empirical studies that have examined the different economic impacts of remittance flows have concluded that higher remittances inflows tend to be associated with lower poverty indicators.

The study finds that:

• Regardless of the counterfactual used remittances appear to lower poverty levels in most recipient countries;
• However, the estimated impacts tend to be modest;
• There is significant country heterogeneity in the poverty reduction impact of remittances flows.

The paper identifies aspects that may lead to varying outcomes across countries. These include:

• The percentage of households reporting remittances income;
• The share of remittances recipient households belonging to the lowest quintiles of the income distribution;
• The relative importance of remittances flows with respect to the gross domestic product (GDP).

The paper concludes that remittances tend to have positive effects on education and health, but this impact is often restricted to specific groups of the population.