Abstract:
Households or individuals are considered as income poor if they are unable to achieve a minimum level of
income or consumption, sufficient to ensure their basic requirements. Migration and remittances are
phenomena where these marginalized communities seek economic opportunities to alleviate poverty in
terms of uplifting their living standards. In addition, migration is regarded as offering upward economic
mobility to those who are economically marginalized. However, studies on the impact of migration and
remittances on the poverty and inequality of rural households in Sri Lanka are insufficient. Therefore, this
study attempts to find the impact of migration and remittance on poverty and inequality in the rural sector
households employing data compiled by the Department of Census and Statistics in Sri Lanka (2009/2010).
Data were analysed using the multinomial logit-OLS two-stage selection control model. It was found that
Poverty Headcount Index, Poverty Gap Index, and Squared Poverty Gap Index of the rural sector has
reduced by 1.85%, 0.37%, 0.02% respectively and inequality has widened by 5.41%. The study concludes that
remittance is an acceptable source of income for households in the rural sector of Sri Lanka while attention
should be paid on appropriate actions to minimize inequality.
