Migration, remittances and poverty: evidence from rural sector of Sri Lanka

Abstract

Households or individuals are considered as income poor if they are unable to achieve a minimum level of income or consumption, sufficient to ensure their basic requirements. Migration and remittances are phenomena where these marginalized communities seek economic opportunities to alleviate poverty in terms of uplifting their living standards. In addition, migration is regarded as offering upward economic mobility to those who are economically marginalized. However, studies on the impact of migration and remittances on the poverty and inequality of rural households in Sri Lanka are insufficient. Therefore, this study attempts to find the impact of migration and remittance on poverty and inequality in the rural sector households employing data compiled by the Department of Census and Statistics in Sri Lanka (2009/2010). Data were analysed using the multinomial logit-OLS two-stage selection control model. It was found that Poverty Headcount Index, Poverty Gap Index, and Squared Poverty Gap Index of the rural sector has reduced by 1.85%, 0.37%, 0.02% respectively and inequality has widened by 5.41%. The study concludes that remittance is an acceptable source of income for households in the rural sector of Sri Lanka while attention should be paid on appropriate actions to minimize inequality.