There is a continuing debate over the impacts of migration on the developing nations despite the ever-increasing size of internal and international remittances. Moreover, a little attention has been paid to analyze the impact of these financial transfers on poverty and inequality of those countries. This study, using a nationally representative sample, assessed the impacts of migration and remittances on poverty and inequality of estate sector households of Sri Lanka. A multinomial logit-ordinary least squares two-stage selection control model and a simulation analysis were used to estimate the impact of migration and remittances on poverty and inequality. Results reveal that internal and international remittances reduce poverty incidence by 2.14% and 2.32%, depth of poverty by 1.33% and 0.98%, and severity of poverty by 0.63% and 0.48%, respectively. Results further suggest that income inequality slightly decreased due to internal and international remittances. Moreover, the findings support a growing view in the literature that migration is a livelihood strategy and it helps in alleviating poverty.

Using a nationally representative data set, we examine whether the individuals' bargaining power within households affects allocation of remittances in estate households in Sri Lanka. Two separate fractional logit models were estimated within the Engle's Curve framework for male headed and female headed households to examine the intra household bargaining on decision making with respect to resource allocation. The results suggest that while female headed households allocate international remittances on food, male headed households allocate such on housing. The results further reveal that internal remittances contribute more for food, communication, entertainment, non-durables, transport and ad hoc purchases of male headed households. The influence of remitters on allocation for the food expenditure is relatively small but it is high for education, housing, health, consumer goods, durables and expenditure for ad hoc purchases, entertainment and transport. Overall, the study concludes that remitter has a greater say over the allocation of household resources over expenditures other than food and housing whereas household head play a significant role in allocating remittances on food and housing.

Availability of external employment and resulting migration play an important role in poverty reduction in the rural areas of developing countries. Estate sector continues to play a major role in the tea industry of Sri Lanka. As fine plucking is still considered to be important to maintain the quality of the final product, shrinkage of residential work force due to outmigration of skilled laborers from formerly residential work is identified as a major problem faced by the industry. From the household perspectives, remittances from migrated members would increase household income and ultimately affect the poverty level of the estate households. Therefore, this study was conducted to investigate the impact of labor migration on poverty in estate sector in Badulla District. Assuming that the remittances are a potential substitute for household earnings within the estate, counterfactual scenarios were built to understand what household poverty would have been in the absence of migration and remittances. Results reveal that poverty incidence, depth of poverty and severity of poverty of households are reduced by 13.19%, 3.81% and 1.37% respectively due to migration and remittances. Hence, the study concludes that labor migration is an important upward driver for households in tea estates to move out of poverty. Identifying skill levels of residential workers and a remuneration policy to encourage retention of high skilled workers to continue work in the estates can be recommended. This may help to have extra income for worker households and increase the labor productivity in the estates.