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Assessing the Poverty Impacts of Migrants’ Remittances Using Propensity Score Matching: The Case of Tonga *
Author(s) -
JIMENEZSOTO ELIANA V.,
BROWN RICHARD P. C.
Publication year - 2012
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2012.00824.x
Subject(s) - counterfactual thinking , propensity score matching , poverty , economics , estimation , matching (statistics) , demographic economics , poverty rate , household income , geography , statistics , economic growth , mathematics , philosophy , management , archaeology , epistemology
We estimate the impacts of remittances on poverty in Tonga, a poor Pacific island country highly dependent on migrants’ remittances. Using household survey data, we apply Propensity Score Matching (PSM) to estimate without‐remittances incomes of migrant households from which counterfactual poverty rates are derived. We compare these with poverty rates from observed income including remittances to gauge their effects on poverty. We find that remittances reduce the incidence of poverty by 31 per cent and depth of poverty by 49 per cent. The results are robust both to alternative specifications of the PSM model and to use of an alternative counterfactual income estimation method.