Assessing the poverty impacts of remittances with alternative counterfactual income estimates

We estimate the impacts of remittances on poverty with survey data from Tonga, a poor Pacific island country highly dependent on international migrants� remittances. The sensitivity of poverty impacts to estimation method is tested using two methods to estimate migrants� counterfactual incomes; bootstrap prediction with self-selection testing and propensity score matching. We find consistency between the two methods, both showing a substantial reduction in the incidence and depth of poverty with migration and remittances. With further robustness checks there is strong evidence that the poorest households benefit from migrants� remittances, and that increased migration opportunities can contribute to poverty alleviation.