Whole-household migration potentially can alter the results of studies on income inequality based on panel data if it selects on household income. We model whole-household migration and its impacts on income inequality and poverty using a unique, nationally representative household panel data set from rural Mexico. Households that participate in whole-household migration and those who do not differ significantly in terms of observable characteristics; however, analyses of income and poverty based on the remaining sample are not necessarily biased. This finding is similar to those in previous research on the effects of attrition on panel data studies. We also analyze the changes in inequality and poverty due to whole-household migration and over time correcting for the effects of attrition. Our results support the migration diffusion hypothesis and underline the importance of paying attention to selective attrition in panel data studies on income distribution and poverty – especially in countries and regions with high migration rates.