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6Remittances, Inequality and Poverty: Evidencefrom Rural MexicoJ. Edward TaylorUniversity of California, DavisJorge MoraEl Colegio de MexicoRichard AdamsThe World BankAlejandro López-FeldmanUniversidad de GuanajuatoThis paper explores the impact of migration and remittances on thedistribution of rural income and on rural poverty, using Gini and povertydecomposition techniques and data from the 2003 Mexico National RuralHousehold Survey. Impacts of migrant remittances on income inequalityhave been a focus of considerable economic research. However, findingsoften have been contradictory, and a unifying theory of remittances andinequality has been elusive. Impacts of remittances on poverty largely havebeen ignored in the development economics literature, and there has beenno effort, to our knowledge, to estimate the influence of remittances onrural poverty in Mexico using household data.The goal of this research is to analyze the distributional and povertyeffects of both international and internal migrant remittances and explorethe differences in these effects across regions. Our findings suggest thatimpacts of remittances are more equalizing and have a larger effect onalleviating poverty in regions where the share of households with migrantsworking abroad is large. We find no such relationship for internal migrantremittances, however.1. Research on Remittances, Inequality and PovertyA number of researchers have examined the distributional effects ofmigrant remittances by comparing income distributions with and withoutremittances (Barham and Boucher, 1998; Oberai and Singh, 1980; Knowlesand Anker, 1981) or by using income-source decompositions of inequalitymeasures (Stark, Taylor and Yitzhaki, 1986, 1988; Adams, 1989, 1991;Adams and Alderman, 1992). These studies offer conflicting findings aboutthe impact of remittances on inequality. Stark, Taylor and Yitzhaki (1986)provide a theoretical explanation for these conflicting findings. They arguethat rural out-migration, like the adoption of a new production technology,101