Remittances and Income Inequality in Rural Nigeria

Remittances- both foreign and domestic- flow to and within Nigeria are huge and no visible effort has been made to study its effects on inequality in rural Nigeria. This study decomposed income inequality in rural Nigeria using the Gini-decomposition and regression-based approaches to investigate the contribution of remittance to income inequality in Rural Nigeria. The results show domestic remittances seem more likely to be income equalizing than foreign remittances. Education is associated with lower domestic remittances and higher international remittances, probably reflecting the role of education in promoting international versus domestic migration. An increase in schooling increases inequality through domestic remittances and decreases inequality through international remittances, while a reduction in household size reduces inequality through both domestic and international remittances. This analysis highlights the importance of the distinction between domestic and international remittances as drivers of inequality as well as the importance of identifying and quantifying the determinants of remittances and their subsequent impact on inequality.