Income inequality in host countries and remittances: A discussion of the determinants of Portuguese emigrants’ remittances

Abstract

The evolution of income inequality in host countries affects the migrants working there. As a significant number of these migrants do not earn high incomes, this evolution tends to significantly affect migrants' abilities to send money back to their home countries. We test this hypothesis considering the evolution of income inequality in 59 countries with Portuguese emigrants through observations from 1996 to 2014. Using the system generalized method of moments (GMM) estimator, we found that an increase in income inequality leads to fewer remittances per emigrant. We also controlled income inequality with several determinants of remittances, including the real GDP per capita, unemployment rate, education skills, and the self-employment rates of the host countries.