Poverty Level Between Remittance-Receiving and Non-receiving Households and the Effect of Poverty on Different Zones, Quintiles, Sex, and Sectors in Nigeria

Abstract

This study examines the difference in poverty level between remittance-receiving and non-receiving households and the effect of remittances on different zones, quintiles, sex, and sectors in Nigeria, using household data from the Nigerian National Living Standard Survey. A linear regression model was employed for estimating counterfactual per capita household expenditure without remittance, while Probit regression model was adopted to examine the effect of remittances on poverty, to know the difference between remittances receiving and non-receiving households. In other to correct for selection bias that could lead to an inconsistent estimate, since migrants were not randomly selected from the pool of households, Heckman selection model,  –  two-step estimates were used. Empirical results showed that poverty level between remittance-receiving and non-receiving households differ. Remittances led to poverty reduction in households. A mixed result was, however, found on the effect of remittances on different zones, quintiles, sex, and sectors. On the basis of the above, the study recommended that remittance-receiving households do not over depend on remittances and working less, which could negatively affect the development of their own financial and economic resources, despite the evidence that remittances contribute to poverty reduction. The government can as well facilitate and encourage expatriate Nigerians in sending remittances to their households. In respect to this, issuance of remittance bonds would be a right step.

Keywords: Poverty, Remittances