Remittances and income inequality in the Philippines

Abstract

The economic and social consequences of remittances are attracting greater attention from scholars and policymakers. This study investigates how international remittances affect income inequality in a highly out-migration and remittance-dependent country, the Philippines. This study shows that the inequality-remittances nexus is inverse U-shaped, suggesting that remittances have an income-equalising effect only after a threshold level, validating the existence of a remittance Kuznets Curve. The findings are robust to various measures of income inequality. Also, Lind and Mehlum's (2010) test of an inverse U-pattern between inequality and remittances verifies this non-linearity.