Impact of Remittances on Income Inequality: Empirical Evidence from Emerging Economies

Emerging economies are becoming increasingly important role and are expected as a new engine of the global economy. The purpose of this report is to examine the impact of remittances on inequality in 18 emerging economies between 1985-2019. The study result confirms that remittances have a negative impact on income inequality, in which, the more received remittances, the lower the level of income inequality in these countries. Besides, foreign direct investment, liquidity of the economy, and trade openness also help to reduce income inequality. However, the increase in GDP per capita, government expenditure, and inflation can widen the income gap between rich and poor people in these countries. Finally, some policy implications are suggested for reducing income inequality in these countries in the future.