Advances in Management and Applied Economics

Remittances and Poverty: A Complex Relationship, Evidence from El Salvador

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• Abstract

  This article examines the correlation between migrant remittances received by communities in El Salvador and the level of extreme poverty. Data from the 2004 national household survey (EHPM) in El Salvador was used to create regression models to determine the incremental impact of remittances on poverty levels across the 262 municipalities of El Salvador. The results revealed that dollar amount of remittances had a statistically significant inverse relationship with level of extreme poverty in municipalities. The regression analyses showed that an average increase of $100 of reported remittance earnings per month per person is correlated with a decrease in the level of extreme poverty of 24% in a given community. This article explains this relationship, along with the effect of other related quality of life and economic indicator variables and examines the complex nature of migration, migrant remittances and impacts in remittance-receiving communities in El Salvador.