Abstract

This study investigates how conflict moderates the relationship between remittances and income inequality in Latin America—an underexplored dimension in the literature. Drawing on a balanced panel dataset of 20 countries from 2001 to 2014, the analysis employs a two-step System Generalized Method of Moments (S-GMM) estimator to address endogeneity, persistence, and country-specific heterogeneity. The results indicate that while remittances generally reduce income inequality, their equalising effect is significantly amplified in conflict-affected settings. These findings support the Insurance Hypothesis, highlighting the role of remittances as informal safety nets during periods of instability. Robustness checks using alternative inequality measures reveal that this effect is most pronounced in reducing disparities between the poorest and richest households, with weaker effects among middle-income groups. The paper concludes by calling for conflict-sensitive remittance and migration policies to enhance the redistributive potential of remittances in fragile contexts.

 

 

 

Keywords: Remittances, Income Inequality, Conflict, Latin America, Migration, Development, System GMM

How to Cite:

Glezer, E., (2025) “How does conflict moderate the impact of remittances on income inequality in Latin American countries?”, UCL Journal of Economics 4(1). doi: https://doi.org/10.14324/111.444.2755-0877.2055