International Remittances, Domestic Sharing, and Income Inequality in Senegal

Abstract

This study examines the impact of international remittances on internal cash transfers in Senegal using instrumental variable analysis with a large sample of individuals aged 13 and above. The findings reveal a direct internal sharing effect of international remittances. Individuals receiving such remittances are 26 per cent more likely to make internal cash transfers, with wealthier recipients showing a stronger propensity. Notably, the poorest individuals benefit the most. When international remittances and internal cash transfers coexist, the Gini index is 3 percentage points lower than in scenarios without international remittances and 9.2 percentage points lower than in scenarios with international remittances but no internal sharing, emphasizing their redistributive nature. These results hold across recipient locations and various econometric approaches.