Proceedings of 2nd International Conference on Business, Management and Economics
Year: 2019
DOI:
The Relationship Between workers’ Remittances and Income Inequality in developing countries: Does Transaction Costs of migrants’ transfers Matter?
Hajer Kratou
ABSTRACT:
In this paper, we have approached the effect of migrants’ remittances on income inequality from the premise that this relationship is not monotonic and strongly dependent on the transaction costs of migrants’ transfers. The economic intuition behind including transaction costs in the above relationship is basically found origins in the UN 2030 agenda for Sustainable Development Goals. The SDGs main reference to transaction cost is made in target 10.c to reduce the fees of sending money home to an average equal 3 per cent (of the value of the amount) by 2030. This is because to “To reduce inequalities, policies should be universal, paying attention to the needs of disadvantaged and marginalized population. Also, innovations in technology can help reduce the cost of transferring money for migrant workers.” (MacNaughton, 2017).
In order to do, target 10.c preconizes that reducing transaction costs would enhance the financial inclusion of poor immigrants and reduce income inequality; this is because the well being of individuals and communities is inextricably linked to the reduction of poverty and income-inequality. Target 10.c is one of the quantitative tool to set limits on the rising gaps between rich and poor and used as a mean to reduce vertical inequalities within and among countries and the commitment to reducing transaction costs means that more of that income-estimated about US dollar 20 billion per year – will go to migrant workers’ families1.