This study uses a small, non-representative household survey from Nicaragua (152 households) to examine the effects of international migration on income distribution. Since remittances may be endogenous, the authors estimate counterfactual incomes for migrants had they stayed and worked at home, and they control for selection bias using a two-stage Heckman procedure. Controlling for human capital and networks, the authors find no evidence of selection bias in the migration process, suggesting that migrants are selected randomly from the population. With respect to income inequality, the authors find that when the observed income distribution is compared with two no-migration counterfactual situations, income inequality is higher when international remittances are included in household income.
© 1998 Elsevier