Remittances and income distribution

Area of Science:

• Economics
• Sociology
• Development Studies

Background:

• International remittances significantly impact developing economies.
• Understanding the distributional consequences of remittances is crucial for policy.

Purpose of the Study:

• To analyze the effect of foreign remittances on income distribution patterns in Yugoslavia.
• To investigate how social group characteristics mediate the impact of remittances on income inequality.

Main Methods:

• Utilized data from Yugoslav household surveys conducted in 1973, 1978, and 1983.
• Employed econometric analysis to assess the relationship between remittances and the Gini coefficient.
• Differentiated analysis across social groups (urban vs. rural) and income levels.

Main Results:

• Foreign remittances were found to increase the Gini coefficient, indicating higher income inequality.
• The rise in inequality was more pronounced in rural households compared to urban households.
• Unequal distribution of migrants across income groups, influenced by information access, explains differential impacts.

Conclusions:

• Remittances exacerbate income inequality in Yugoslavia, with varying intensity across social strata.
• Information diffusion and income levels play a key role in shaping migration patterns and remittance impacts.
• Policies addressing remittance flows should consider social group specificities to mitigate inequality.