The paper "The Role of Migrant Remittances in Reducing Poverty and Inequality in Developing Countries" is a good example of a macro & microeconomics essay. For a developing country that lacks economic opportunities for large parts of its population, the ability of workers to migrate and find work in other countries is an important source of income for families and a key part of the national economy. At the beginning of this decade, it was estimated that about 175 million people – a number approximately equal to the entire population of Brazil, by way of comparison – were working outside of their home countries, making remittances, earnings sent back to the home countries to support families, the second-most important source of outside funding for the developing world.
(Adams & Page, 2005: 1645) This essay explores whether or not migrant remittances reduce poverty and income inequality in developing countries, and if so, to what degree. Intuitively, it would seem that remittances do make a significant positive contribution. A migrant earning from a well-paying job, or at least one that pays significantly more in the host country than in his homeland, can add a large amount to his family’ s income with just a small percentage of his earnings.
(Goldfarb, et al. , 1984: 3) There have been numerous studies done with the aim of quantifying the effect of remittances; this essay examines a few of these, first in relation to remittances’ effect on poverty levels, and second with respect to their impact on income inequality. Based on these studies, some conclusions as to the overall impact of remittances will be offered. The Impact of Remittances on Poverty In the simplest terms, remittances from migrant workers do reduce poverty – defined in almost every study as a daily income of less than $1.00 per day – but the recent studies that have defined the degree of the poverty reduction effect make a number of qualifications.
The impact of remittances seems to be fairly consistent. Adams and Page (2005) determined that a 10% increase in remittances leads to a 3.5% decrease in the number of people living in poverty.
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Adams, R.H. (2009) “The Determinants of International Remittances in Developing Countries”. World Development, 37(1): 93-103.
Adams, R.H., and Page, J. (2005) “Do International Migration and Remittances Reduce Poverty in Developing Countries?” World Development, 33(10): 1645-1669.
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