The Impact of Returnee Migrants’ Remittances on Reducing Household Inequality and Poverty in Bangladesh: A Micro‐Level Study

ABSTRACT Remittances are significant determinants in reducing income inequality and mitigating poverty, particularly in developing countries like Bangladesh. This study analyzes a representative micro‐level survey data to quantify the impact of remittances on poverty and inequality in income, expenditure, savings, and investment distributions. Using the Gini coefficient and Atkinson index, the study examines categorical inequality measures in the context of Bangladesh. Additionally, it employs propensity score matching (PSM) and the headcount ratio (HCR) to evaluate the impact of remittances on household poverty levels across various economic indicators. The findings reveal that remittances enhance household well‐being by increasing income, thereby raising the standard of living for migrant households. This is evidenced by the average treatment effect on the treated (ATT) for key economic indicators, such as land ownership, non‐food expenditure, savings, and investment. The HCR approach further confirms that remittances significantly reduce poverty levels. Moreover, the Gini coefficient estimates indicate that remittance inflows have led the treated group (households receiving remittances) to achieve greater equality in income, expenditure, savings, and investment distributions compared to the control group (households without remittances). The Atkinson index approach validates the robustness of these findings, showing that they are not overly sensitive to the inequality aversion parameters. This study provides important policy implications for the Government of Bangladesh and other developing countries that heavily depend on remittances.