Out of inequality and poverty: Evidence for the effectiveness of remittances in Sub-Saharan Africa

This paper takes a new look, from a macro perspective, at the issue of remittances effectiveness. An important point of departure for this study is the adoption of poverty reduction, as contrasted with economic growth, as the metric for measuring remittances effectiveness. By controlling for time-invariant country-specific effects and endogeneity, I find that remittances reduce poverty, but the size of the poverty reduction depends on how poverty is being measured. Additionally, remittances have income equalizing effects. A well-functioning financial sector enhances remittances effectiveness in Sub-Saharan Africa. (C) 2015 The Board of Trustees of the University of Illinois. Published by Elsevier B.V. All rights reserved.