Description

This paper uses nationally-representative household surveys from 11 Latin American countries to examine the impact of international remittances on poverty, education and health. 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-step Heckman procedure. The authors find evidence of selection bias in the migration process, suggesting that households with a higher propensity to not migrate also have higher per capita incomes. Results from the counterfactual income estimates suggest that the impact of remittances on poverty is positive but modest: in most countries poverty headcounts fall by no more than 5 percent when remittances are included in household income.