The impact of remittances and equivalence scales on poverty in Tajikistan

Abstract

The aim of this paper is to study the impact of remittances from labour migrants on welfare, as well as the impact of the use of equivalence scales on poverty, in Tajikistan. The magnitude of remittances sent back is fairly well known from official statistics (e.g. the amount of remittances is regularly monitored by the balance of payment at the Central Bank). In 2009 a change in the flow of money from abroad occurred, and volumes dropped, but it was unknown to what extent; its impact on poverty is still officially unknown. This paper describes a project aimed at conducting a survey to investigate this impact. It would not be possible to do this kind of analysis with a traditional sample survey, since it would generate only a small selection of migrant households. Instead, the new Migration, Remittances and Poverty Survey was used, which was conducted by the Tajik State Statistical Office in August 2010 using an adaptive sampling design from a set of enumeration areas selected mainly from the 2009 Integrated Household Budget Survey (IHBS) and showing households with remittances. To evaluate the impact of equivalence scales on poverty measures, new scales have been estimated on the basis of consumption expenditure from the 2009 IHBS.

Keywords:

• remittances
• poverty
• equivalence scales
• Tajikistan

Notes

Data obtained from the Tajik State Statistical Office, [email protected], http://www.stat.tj

The Tajikistan 2009 Living Standards Survey (TLSS09) is a panel survey of 1,500 households interviewed during the Tajikistan 2007 Living Standards Survey (TLSS07), http://iresearch.worldbank.org/lsms/lsmssurveyFinder.htm

The survey defines a household as a group of persons who normally eat and live together. These people may or may not be related by blood, but make common provision for food or other essentials for living, and have only one person whom they all regard as the head of the household.

This survey was funded by the EU programme EUROPEAID/127176/C/SER/MULTI, ‘Further Development of National Statistics in the Kyrgyz Republic, Turkmenistan and Tajikistan – Statistics 11’ with reference to Component 10 of the Survey of Households, Money Remittances and Poverty in Tajikistan.

Equivalent income is defined as total household disposable income divided by the so-called modified OECD 50–30 equivalence scale; see section 4 for more details.

At the time of present calculations, 2009 TLSS microdata are not available to researchers.

However, in order to improve country representativeness of the adaptive sample, poverty results have been calibrated using weights from the 2000 population census.

When Poland and Romania joined the European Union, they adopted the modified OECD scales.