Impact of Foreign Remittances on Inequality: Bangladesh Case

• Main Author: Islam, Sheikh Atiya
• Other Authors: YSI Asia Convening 2019
• Format: Conference or Workshop Item
• Language: English
• Published: H. : ĐHKT 2020
• Subjects: Bangladesh; Foreign Remittances; Inequality
• Online Access: http://repository.vnu.edu.vn/handle/VNU_123/70825
• Institution: Vietnam National University, Hanoi

Bangladesh is one of the fastest growing economies in the world today. However, this promising picture gets somewhat tainted when we take a closer look at how unevenly this growing income is distributed in the economy. This paper attempts to establish a relationship between remittance inflows and the economic inequality in Bangladesh and empirically analyze how the former impacts the latter. The study is conducted on the rural households of Bangladesh and used Lorenz estimation and Gini decomposition methods to conduct the analysis. The study finds that remittance has a significant impact on the inequality of the expenditure distribution and despite itself being unequally distributed as an income source, with a relatively high source-Gini, it tends to reduce inequality and thereby, creating an equalizing effect, among the low-income households. Thus, the study concludes that proper policies should be drawn to incentivize formal channeling and efficient utilization of remittance inflows, particularly aimed at reducing inequality.