In spite of the prevalence of rural-urban interactions in developing countries, much remains to be learnt about their welfare impacts. This thesis extends the discussion on rural-urban linkages by examining – for Ghana – two of the main forms of such interactions: migration and remittance flows. The study explores factors influencing migration and remittance flows, and also evaluates the impacts of these linkages on poverty and consumption welfare, using data from the 1998/99 Ghana Living Standards Survey. A key feature of the analyses is the construction of counterfactual scenarios and the application of a methodology that adjusts for selectivity bias.
The estimates of migration gains show different mean welfare impacts on our two types of in-migrants. Although some urban-to-rural in-migrants derived welfare gains from migrating, urban-to-rural migration generally had a negative impact on the welfare of in-migrants. In the case of rural-to-urban migration, a small percentage of in-migrants incurred welfare losses, but on the whole, migration enhanced considerably the welfare of in-migrants. Additionally, there is evidence to suggest that on the whole, rural nonmigrants would have incurred a reduction in welfare if they had migrated to urban areas.
In the analysis of remittances, a number of influences on these flows have been identified. These include employment income, the presence of an in-migrant, kinfostering, the relationship between remitters and recipients, and gender. Our results also provide support for the presence of both altruism and self-interest in remittance decisions. Even though rural-to-urban remittances had little impact on the welfare of recipients, our estimates suggest that rural recipients of urban remittances derived, on average, considerable proportionate welfare gains.
According to the findings, both migration and remittance flows often affect the poverty status of participants. For many of these migrants or remittance recipients, these linkages constitute an important route for escaping poverty. Finally, relative to intersectoral migration, inter-sectoral remittances had a more favourable direct impact on aggregate poverty and inequality.