2 REMITTANCES AND INEQUALITY IN RURAL MEXICO

ABSTRACT. In this paper, we investigate the impact of internal and external remittances on rural income inequality in the context of Mexico, and try to understand how that im-pact evolved over time. Using income decomposition techniques on a Mexican household panel carried out every two years, the paper finds that both internal and external remit-tances have a positive effect on rural equality. Although the external remittances become more and more equalizing over time, we find that internal remittances are always more equalizing than external ones. However, after imputations for the potential home lost in the earnings of migrant families, our findings indicate that external remittances actually may have been increasingly unequalizing for rural Mexican households