Analysis of Impact of Remittance on Poverty in Nigeria
PEP Working Paper serie No. 2012-09
34 Pages Posted: 18 May 2018 Last revised: 12 Jul 2018
Date Written: October 1, 2012
This study analyzes the impact of remittances on poverty in Nigeria. The Nigerian National Living Standard Survey 2004 data was used. The paper used multinomial logit model with instrumental variables and propensity score matching (PSM) method to estimate the impact of remittances on poverty. The use of these methods was based on two reasons. The first is to control for the problems of selectivity and endogeneity. The second is the fact that the implicit hypothesis of estimating the expenditures of the counterfactual group, as done in some previous studies, is in similarity between the group that receives remittances (treated) and the other that does not (untreated). The study finds that both internal and international remittances reduce the incidence, depth and severity of poverty. The statistical tests show a significant Average Treatment Effect on the Treated (ATT), due to internal and external remittances. The receipt of internal remittances reduces the poverty headcount by 11.14% and poverty gap by 9.7% while the receipt of international remittances makes poverty indices almost nil.
Keywords: Remittances, Poverty, Instrumental Variable, Propensity Score Matching, Nigeria
JEL Classification: D63, I31, I32, O15, P46
Suggested Citation: Suggested Citation