WPS4249 recipients experience substantial upward shifts along the income distribution. For instance, 61 percent of the Mexican households that receive remittances are in the first quintile of the distribution of observed non-remittances income, but that fraction falls to 25 and 26 percent for the other two income definitions. This confirms that as a measure of the counterfactual nonmigration income of recipients, the observed non-remittances income suffers from a substantial downward bias, presumably because recipient families loose significant income earners in the migration process. Similar results are found in all countries.

# TABLE 6 HERE

Table 6 also serves as a characterization of the socioeconomic status of recipient families. Thus, it is clear that in some countries migrants and recipient families tend to come from definite socioeconomic segments of society. For instance, even after correcting for the potential downward bias in reported non-remittances income, both tables with actual and imputed values suggest that a higher proportion of migrants tend to come from the bottom of the income distribution in Mexico and Paraguay.<sup>30</sup> In contrast, for Haiti, Peru and Nicaragua, we find evidence that goes in the opposite direction: migrants seem to be “positively selected”, in the sense of coming from the upper quintiles of the income distribution. The evidence concerning negative selection in Mexico and Paraguay, and positive selection in Haiti, Peru and Nicaragua seems to be corroborated by the distribution of recipient families according to the average years of education of actual adult members and household assets index (Table 7). For the other countries the evidence is not conclusive, with migrants showing a more uniform distribution along the various measures of income/wealth/education.

# TABLE 7 HERE

Table 8 shows estimates of the Gini coefficient using counterfactual imputed nonremittances income for recipient families. The general trend is that remittances have an even less equalizing effect in comparison to what had been obtained when using reported non-remittances income. The equalizing effect of remittances is much lower in six out of ten countries. For two of them, Mexico and Paraguay, remittances now even seem to increase inequality – although the evidence is not conclusive in Paraguay, according to the 95% confidence interval on the imputed Gini before remittances.

# TABLE 8 HERE

On the other hand, in Haiti, Guatemala, Nicaragua and Peru, where migrants come from the upper segments of the income and educational distribution, the evidence is quite the opposite. For these countries, remittances now reduce inequality much more than before. Thus, when calculated using imputed non-remittances income, the Gini coefficient “before remittances” is higher than the Gini for observed total income. The most notable difference is registered in Haiti: the fall in inequality with respect to the no-remittances scenario was of 0.09 percent, but the reduction in the Gini starting from the no-migration scenario is now found to be of 7.67 percent. In Nicaragua and Peru, the effect of remittances on inequality actually switches from positive to negative when using imputed as opposed to reported non-remittances income.

> 30 For the Mexican case, these results agree with Ibarraran and Lubotsky (2005).

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