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Remittances and Inequality - a Case Study of Albania

Petersen, Louise LU (2012) NEKH01 20121
Department of Economics
Abstract
The importance of migrants' remittance transfers in global capital flows is steadily growing. A large body of literature has been dedicated to the study of remittances, its underlying causes, and its effects on development in receiving countries. Albania, one of the poorest countries in Europe, experienced massive emigration in its post-communist transition era, and remittances have since constituted a crucial source of income, helping to lift a large share of Albanians out of poverty. Although the effects of remittance transfers on poverty are quite clear, their implication on the income distribution is less evident. This study explores the net effect of remittances on income equality in Albania by employing a Gini decomposition by income... (More)
The importance of migrants' remittance transfers in global capital flows is steadily growing. A large body of literature has been dedicated to the study of remittances, its underlying causes, and its effects on development in receiving countries. Albania, one of the poorest countries in Europe, experienced massive emigration in its post-communist transition era, and remittances have since constituted a crucial source of income, helping to lift a large share of Albanians out of poverty. Although the effects of remittance transfers on poverty are quite clear, their implication on the income distribution is less evident. This study explores the net effect of remittances on income equality in Albania by employing a Gini decomposition by income sources proposed by Stark et al. (1986) to World Bank Living Standard Measurement Survey data from 2005. Theory argues that remittances and inequality display an inverted U relationship over time, implying that remittances should be prone to increase inequality in Albania due to its short migration history. Conversely, the results of this study unveil that the marginal effect of remittances on the income equality in Albania is small but positive. This study therefore suggests that the nature, and not the length, of the migration process determines the initial effect of remittances on the income distribution. (Less)
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author
Petersen, Louise LU
supervisor
organization
course
NEKH01 20121
year
type
M2 - Bachelor Degree
subject
keywords
remittances inequality migration Albania
language
English
id
2607813
date added to LUP
2012-06-15 11:29:15
date last changed
2012-06-15 11:29:15
@misc{2607813,
  abstract     = {The importance of migrants' remittance transfers in global capital flows is steadily growing. A large body of literature has been dedicated to the study of remittances, its underlying causes, and its effects on development in receiving countries. Albania, one of the poorest countries in Europe, experienced massive emigration in its post-communist transition era, and remittances have since constituted a crucial source of income, helping to lift a large share of Albanians out of poverty. Although the effects of remittance transfers on poverty are quite clear, their implication on the income distribution is less evident. This study explores the net effect of remittances on income equality in Albania by employing a Gini decomposition by income sources proposed by Stark et al. (1986) to World Bank Living Standard Measurement Survey data from 2005. Theory argues that remittances and inequality display an inverted U relationship over time, implying that remittances should be prone to increase inequality in Albania due to its short migration history. Conversely, the results of this study unveil that the marginal effect of remittances on the income equality in Albania is small but positive. This study therefore suggests that the nature, and not the length, of the migration process determines the initial effect of remittances on the income distribution.},
  author       = {Petersen, Louise},
  keyword      = {remittances inequality migration Albania},
  language     = {eng},
  note         = {Student Paper},
  title        = {Remittances and Inequality - a Case Study of Albania},
  year         = {2012},
}