Remittances and Income Inequality in Croatia

Abstract: The objective of this case study is to analyze the impacts of remittances on income distribution in Croatia. The thesis is based on the balance of payments data and the data from national household surveys. The results suggest that remittances have contributed to an equalized income distribution in the country over time. Moreover, the remittance flows have had a small effect on the level of poverty, but a larger impact on the depth and severity of poverty. The main form of remittances to Croatia has been investments in real estate and human capital. Accordingly, the money flows represent an important and stable source of income for the domestic economy, which has caused GDP growth through means of the multiplier effect and a more developed financial market.