Non-linear Relationship between Income Inequality and International Remittance: An Empirical Investigation of Bangladesh

Abstract

The main purpose of this study is to investigate the nonlinear relationship between foreign remittance and income inequality of Bangladesh by utilizing yearly data from 1990 to 2018. By using Johansen-Juselius cointegration test and ordinary least squares approach this study reveals a considerably nonlinear pattern of the relationship of remittance and income inequality, and portrays as inverted U-shape. This article also shows that income inequality is positively affected by other factors such as the unemployment rate and inflation and negatively affected by manpower of Bangladesh. Thus, the economy of the country might strive to use foreign money, not just in consumption, in productive sectors, and remittances play a critical role in maintaining the income balance. The research also suggests that Bangladesh's manpower resources be used properly to eliminate inequalities.