Estimation of the net effects of remittances on poverty and inequality. Evidence from rural southern Morocco

By Jamal Bouoiyour (Université de Pau, CATT, France)  and Amal Miftah (Université de Paris Dauphine, LEDa, France)

http://EconPapers.repec.org/RePEc:pra:mprapa:55686

Policy Brief: 

Poverty alleviation is widely acknowledged as the ultimate objective of any development policy. Thus poverty assessments and the characteristics of those who are poor have been the main analytic tools for government and policy on poverty. As other developing countries, Moroccan government has taken significant measures in the area of  human and social development. One of the leading measures bears on the launch of National Initiative for Human Development (NIHD) in 2005, targeted at disadvantaged people and geographical areas. Such measures have helped to achieve success the ambitious goal of reducing significantly the number of its population living in extreme poverty gradually[1].

In Morocco, as in many developing countries, recent decades have been marked by unprecedented increase of migrants’ remittances. These financial flows provide a steady income for many Moroccan households. We can imagine that, in this context, remittances from international migrants can contribute to the economic inequalities reduction and improve the living conditions of its beneficiary households. This study assesses empirically these effects by focusing on rural households in southern Morocco. The underlying idea is to imagine a hypothetical scenario without migration of a family member. The average expenditures per household are computed for two cases: the counterfactual situation without migration and the real situation with migration. The data used for this study come from a survey conducted in southern Morocco in 2009. This study looks at the evaluation of the impact of remittances on inequality and poverty in Morocco. The data were collected in 18 communes located in rural and less developed areas of Souss-Massa-Draa, a region with a long history of international migration (the figure in Appendix gives the geographical location of the region). Communes were selected according to certain criteria such as the rate of international migration, the geographic distribution of groups, the socio-ethnic factions, and the access to basic services. Survey was conducted with households collected randomly in these communes. In total 598 household heads were interviewed, providing information on 4,870 family members.

The empirical results of this study show that migrants’ remittances significantly reduce the number of poor households. They also prevent vulnerable households from falling into poverty. In other words, remittances reduce the vulnerability of households to poverty, i.e., the ex-ante risk that a household will, if currently non-poor, fall below the poverty line. Of course, even if migrants are not all from poor families, their remittances may have an indirect effect on the poor through a knock-on effect of spending (Taylor, 2001).

Furthermore, this study reveals the existence of high income inequality and unequal distribution of wealth. Significant differences were also observed in relation to the reception or not of migrants’ transfers. Our results show that migration and remittances have increased income inequality compared to the counterfactual scenario of no-migration. This result confirms the findings of research using this type of empirical approach (Barham and Boucher, 1998 in particular). However, the naïve analysis of the income distribution of households (Adams’s approach) shows that with transfers, income distribution is less uneven.

More specifically, we noted that despite its considerable efforts, Morocco could not progress in reducing income inequality. Remittances cannot replace proactive public policies which aim to fight this scourge. We are therefore entitled to ask about the role of Moroccan government in the income distribution and if recent events in some MENA countries (revolts and change political regimes) should encourage Moroccan officials in the implementation of coherent and long term policies.

Références: 

Barham B, Boucher S (1998) Migration, remittances, and inequality: estimating the net effects of migration on income distribution. Journal of Development Economics Vol. 55 :307-331.

Taylor J.E (1999, 2001) Migrations : nouvelles dimensions et caractéristiques, Causes, conséquences et répercussions en termes de pauvreté rurale. Alimentation, agriculture et développement rural, Problèmes actuels et émergents en matière d’analyse économique et de recherche de politiques, Stamoulis, K.G (Ed.), FAO – ISBN 92-5-204566-X. 1 webpage.

[1] According to statistics from High Commission for Planning (HCP), between 1980 and 2007, poverty at U.S. $ 1 (PPP) per day per person has been virtually eliminated (0.6% in 2007).

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