24 13 To ensure compatibility across countries, all of the poverty lines in Annex Table A1 are international poverty lines, set at estimates of $1.08 per person per day in 1993 purchasing power parity (PPP) exchange rates. The PPP exchange rates are used so that $1.08 is worth roughly the same in all countries. PPP values are calculated by pricing a representative bundle of goods in each country and comparing the local cost of that bundle with the U.S. dollar cost of the same bundle. In calculating PPP values, the comparison of local costs with U.S. costs is done using conversion estimates produced by the World Bank.

14 In this paper the terms “expenditure” and “income” are used interchangeably.

15 While a transfer of expenditures from a poor person to a poorer person will not change the headcount index or the poverty gap index, it will decrease the squared poverty gap index.

16 In 1992 the stock of illegal immigrants in the United States was estimated at 3.4 million, or about 16 percent of the stock of the “foreign-born” population. See George Borjas, “The Economic Benefits from Immigration,” Journal of Economic Perspectives 9:2 (Spring 1995): 14.

17 All of the data on the “foreign-born” population living in the OECD (Europe) comes from Organization for Economic Cooperation and Development (OECD), Trends in International Migration (Paris, various issues).

18 Adams, Jr., The Effects of International Remittances on Poverty, p. 13.

19 Ravallion and Chen, pp. 360-361.

20 Angus Deaton, “Counting the World’s Poor: Problems and Possible Solutions,” World Bank Research <u>Observer</u> 16: 2 (Fall 2001): 125-147. See also Adams, Jr., Economic Growth, Inequality and Poverty.

21 When equation (1) is estimated in first differences, neither of the variables of concern – migration as share of country population and remittances as share of country GDP – are statistically significant. Two possible reasons can be cited for this outcome. First, neither the migration nor the remittances variable show much variation over time. Second, in taking first differences, there is an increase in the noise-tosignal ratio (the ratio of measurement error to information) and it is likely that this increase in noise leads to the estimation of less precise coefficients for the migration and remittances variables.

22 Martin Ravallion, “Can High-Inequality Developing Countries Escape Absolute Poverty?” Economics <u>Letters</u> 56 (September 1997): 51-57; and Adams, Jr., Economic Growth, Inequality and Poverty, p. 13.

23 M. Greenwood, “Research on National Migration in the United States: A Survey,” Journal of Economic <u>Literature</u> 13 (June 1975): 397-433; George Borjas, “Self-Selection and the Earnings of Immigrants,” <u>American Economic Review</u> 77:4 (September 1987): 531-553; and George Borjas, “Economic Theory and International Migration,” International Migration Review 23:3 (Fall 1989): 457-485.

24 In equation (2), migration flow is measured as the share of migrants in labor-exporting country i that is moving to labor-receiving region j.

25 Borjas, “Self-Selection and Earnings of Immigrants,” p. 545-547.

26 David Karemera, Victor Oguledo and Bobby Davis, “A Gravity Model Analysis of International Migration to North America,” Applied Economics 32:13 (2000): 1745-1755; Michael Vogler and Ralph Rotte, “The Effects of Development on Migration: Theoretical Issues and New Empirical Evidence,” <u>Journal of Population Economics</u> 13: 3 (2000); 485-508; and Timothy Hatton and Jeffrey Williamson, “What Fundamentals Drive World Migration?” Wider Discussion Paper No. 2003/23 (Helsinki, Finland: 2003).

27 Borjas, “Economic Theory and International Migration.”