International Remittances, Domestic Remittances, and Income Inequality in the Dominican Republic

Abstract

Inequality decomposition techniques are used to analyze the different impacts of domestic and international remittances on household income inequality in the Dominican Republic. 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. Domestic remittances are found to be more equalizing than international remittances. Education leads to lower domestic remittances and higher international remittances, reflecting the role of education in promoting international versus domestic migration. Schooling increases inequality through domestic remittances and decreases inequality through international remittances.