Migration, remittances, and inequality: estimating the net effects of migration on income distribution

This paper examines the net effects of migration and remittances on income distribution. Potential home earnings of migrants are imputed, as are the earnings of non-migrants in migrant households, in order to construct no-migration counterfactuals to compare with the observed income distribution including remittances. The earnings functions used to impute migrant home earnings are estimated from observations on non-migrants in a selection-corrected estimation framework which incorporates migration choice and labor-force participation decisions. For a sample of households in Bluefields, Nicaragua, migration and remittances increase income inequality when compared with the no-migration counterfactual. (C) 1998 Elsevier Science B.V.