Poverty and south-south financial remittances in Paraguay

Abstract

There is a debate going on about international financial remittances in terms of the connections between migration and development. However, there is no consensus as to the effects that these remittances have on economies of origin and on  receiving households. In this paper we analyze the effect of the receiving of regional remittances on the level and incidence of poverty among Paraguayan households. We use micro data from the 2009 Permanent Household Survey, conducted by the General Department of Statistics, Surveys and Censuses (DGEEC, Paraguay). Regional remittances are defined as those sent from Argentina and Brazil. We applied the method of propensity score analysis to construct comparable groups and thus isolate the effect of reception of regional remittances from other variables that affect the poverty status of households. Results suggest that remittances do have a positive effect in alleviating extreme poverty and the incidence of poverty. However, the result is not entirely conclusive, since nonextreme poverty more strongly  affects the households that receive remittances.