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3.2 Effects of Migrant Remittances on PovertyA poverty line, z, is required in order to estimate the effects of changes inmigrant remittances on poverty. The poverty line we use is the per-capitaincome required to purchase a basic basket of food and nonfood itemsin rural areas. It was estimated by the Mexican government (SEDESOL)at 28.1 pesos per day, including 15.4 pesos for food, 3.5 for basic healthand education, and 9.8 for clothing, shelter, utilities, and transportation. 7Impoverished individuals are those who were living in households in whichthe per-capita income per day was less than 28.1 pesos. Table 6 reports theshare of the population living below the poverty line in each region and inall of rural Mexico in 2002. Overall, 53 percent of rural Mexicans live inhouseholds with per-capita incomes below the poverty line. The incidenceof poverty ranges from 34 percent in the Northwest region to 77 percent inthe South-Southwest.To estimate the effect of migrant remittances on poverty, we first calculatedthe FGT poverty measure, using Equation 13, as well as the three alternativepoverty measures given above (the headcount, poverty gap, and squaredpoverty gap). We then decreased each of the two types of remittances,in turn, by 10 percent. Households that did not receive remittances areunaffected. The poverty effects of changes in remittances depend upon theextent to which remittances flow to poor (and, depending on the measure,very poor) households.116Table 6. Incidence of Rural Poverty, National and by Region in 2002 using the HeadcountMeasurePercentage of Rural Population in Impoverished HouseholdsUsing Poverty Line Constructed from Cost of Basic Basket of…RegionFoodFood, BasicHealth, andEducationFood, Basic Health,Education, Clothing,Shelter, Utilities andTransportationSouth–Southeast 0.62 0.69 0.81Center 0.36 0.45 0.63West–Center 0.30 0.36 0.52Northwest 0.20 0.25 0.35Northeast 0.38 0.43 0.58All Regions 0.38 0.44 0.587See http://www.sedesol.gob.mx/subsecretarias/prospectiva/medicion_pobreza