This article considers the effects of emigration on poverty and inequality by drawing on an original survey conducted in Algeria. It is the first household survey in Algeria that specifically addresses the issues of migration and remittances and provides the information necessary to evaluate their impacts on poverty and inequality. Furthermore, unlike many household surveys, this survey also collects information on pensions (a very important income source) received in the country of origin based on overseas work for returning migrants. It focuses on two regions (Kabylia and Tlemcen) which differ in terms of diaspora organisation, migration history and regional insertion. Semiparametric descriptive analysis is complemented by a parametric model, which allows for the estimation of counterfactual household income and the calculation of the impact of migration on the distribution of income across households.

The main findings are that remittances, including foreign pensions, do not significantly change the Gini coefficient in either region. However, the simulations suggest that migration has reduced poverty by nearly 16 percentage points (40 per cent), with the effect in Kabylia (Idjeur) being twice as large as Tlemcen (Nedroma) insofar as concerns extreme poverty. Foreign transfers, especially foreign pensions, have a strong positive impact on very poor families in Idjeur but much less in Nedroma, where poor families suffer from a ‘double loss’ due to the fact that that their migrants do not provide local income nor do they send much money home. This difference between the two regions may be explained by the fact that communities in Kabylia are more structured, and that Kabyle emigrant communities overseas replicate these structures, reinforcing strong social norms in favour of remitting behaviour. Finally, this article presents results consistent with the finding in the literature showing an inverse U-shaped relationship between past migration and inequality, but suggests a nuanced interpretation due to the inequality-inducing effects of foreign pensions.