Prague Economic Papers 2021, 30(4):426-448 | DOI: 10.18267/j.pep.776

Remittances and Inequality: The Post-Communist Region

Azizbek Tokhirov ORCID...a, Jaromír Harmáček ORCID...b, Miroslav Syrovátka ORCID...b
a Charles University, Faculty of Science, Prague, Czech Republic
b Palacký University, Faculty of Science, Olomouc, Czech Republic

This study aims to investigate the impact of international remittances on income inequality in the post-communist region. The association between the variables is examined via static and dynamic panel models. Using macroeconomic data from 27 countries over the period 1991-2014, we discover that income inequality progresses along a U-shaped course as a country becomes more dependent on remittances. For most of the countries, the relationship between remittances and inequality is inverse. When remittances account for more than 20% of GDP, they exacerbate economic inequality. This finding challenges the view that remittances should only be viewed as a pro-poor redistribution mechanism because in certain cases, additional migrant transfers may actually increase income inequality.

Keywords: Income inequality, migration, international remittances, post-communism
JEL classification: E25, F24, O15

Received: March 17, 2020; Revised: March 2, 2021; Accepted: April 29, 2021; Prepublished online: June 3, 2021; Published: August 31, 2021  Show citation

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Tokhirov, A., Harmáček, J., & Syrovátka, M. (2021). Remittances and Inequality: The Post-Communist Region. Prague Economic Papers, 30(4), 426-448. doi: 10.18267/j.pep.776
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