Nexus Between Inward Remittances and Income Inequality in Thailand

Abstract

The study investigated the nexus between income inequality indices in time series dominating financial flows in Thailand from 1990 to 2018, using OLS, FMOLS, and DOLS as estimation methods to ensure the results’ robustness. In earlier 1998, it seemed that the external trade of Thailand experienced a vast deficiency in foreign capital, and it needs a sufficient amount of external finance to promote economic growth, which helps to enhance employment opportunities, increase equal distribution of per capita income, and eliminate poverty. In this regard, the remittance inflows played an unneglectable role in reducing income inequality instead of foreign development assistance. Our empirical findings revealed Thai economy does not hold the Kuznets form of relationship between income inequality and GDP per capita. Moreover, the study showed that there is an inverse relationship between inward remittance inflows and income inequality. However, the study confirmed a positive but insignificant contribution of foreign aid to income distribution. The government should strengthen receipts channels and incentivize investing in human capital as a policy implication.