Impact of Workers’ Remittances on Poverty Index New Evidence from Jordan

Abstract

The workers’ remittances is one of the most important sources of external cash inflows for many countries worldwide. This importance creates from its high added value in the economy reached 10% of GDP in Jordan's economy. So, this study aims to resolve the economic impact of the remittances by Jordanian workers on the poverty index during 2000-2018, the comparative effect of such remittances with economic growth, and the inequity in income distribution is manipulated. An econometric model is designed and the natural logarithm of variables in the research model is used. The dependent variable is the poverty index LP, while the independent variables are remittances of migrant workers REM, economic growth EG, and the inequality in income distribution IEQ using the ARDL approach. The study concludes that there are statistically significant effects of the remittances and economic growth on the poverty rate in Jordan in the long term with no significant, but the relationship between income inequality and the poverty index is not proved in the long and short terms. The study develops a set of recommendations contain key economic implications that ensure the better uses of cash inflow and improve their contribution to the national economy.