Do remittances improve income inequality? An instrumental variable quantile analysis of the Senegalese case

To improve understanding of migration and remittances in sub-Saharan Africa, the World Bank in collaboration with the Africa Development bank conducted a highly representative cross-section migration survey which captures rich information about migrants and their households including remittance sending and receipt. This was undertaken as part of the Africa migration project and used as case studies the migration prevalent countries of Burkina Faso, Kenya, Nigeria, Senegal, South Africa, and Uganda. Bang et al. (2016) was the first to contribute to the debate about the distributional impact of remittances in sub-Saharan Africa, using these surveys. They concluded, on the basis of the Kenyan sample, that remittances reduce income inequality among households through their more than proportionate income enhancement for households in the lowest quantile of income distribution. Specifically, although remittances have positive impacts at all quintiles of income distribution for the Kenyan sample, their impact at the lowest quantile is about four times the impact at other quantiles. The present article follows this work closely and aims to assess the impact of remittances on income distribution using the Senegalese sample. A unique feature of these surveys is that they allow for comparison across countries, since the surveys were implemented during the same period using similar sampling methodology and achieve similar outcome in terms of representativeness. Any causal difference between any two of the samples therefore should reflect a deep-rooted fixed effect that policies should target.