Natural Disasters and Poverty Reduction: Do Remittances Matter?

Do private funds help mitigate poverty in the context of natural disasters? This article aims to answer this question by looking at the joined effect of migrants' transfers and natural disasters on poverty level in developing countries. Using panel data from developing countries over the period 1984-2010 and a fixed effects model, our results show that private mechanisms, such as remittances, significantly alleviate poverty when natural disasters occur in these countries. Put differently, we find that the effect of remittances on poverty is all the more important when they are received in countries experiencing natural disasters. Our results are confirmed by various robustness tests to mitigate the endogeneity issues.