Impact of Remittance on Income Inequality in Bangladesh

Abstract

Does foreign remittance inflow increase income inequality? Or is it the other way around? These are the type of questions that can never be answered conclusively. However, there is no harm in attempting to investigate the matter. This paper attempts to do that exactly by examining certain factors that are directly related to economic growth of Bangladesh. The objective was to determine how these growth factors behaved against an increase or decrease in the level of remittance inflow. The whole study was based on data collected from the World Bank databases. A number of tests, such as: ‘Augmented Dickey Fuller Test’, ‘Phillips-Perron Test’, ‘Cointegration Test’, ‘Johansen Test for Cointegration’, etc. were run using the collected data. However, this rise in income inequality was very small; and therefore, it cannot explicitly be said that remittances cause income inequality to rise by a significant margin; nor can it be said that remittances keep income inequality at bay. And, the debate goes on.