Date Published:
Jun 01, 2007
Focus Area(s):
Author(s):
Code:
DP 2007-18

This paper examines the general relationship between remittances and household expenditures in the Philippines by doing a cross-sectional analysis of the 2003 Family Income and Expenditure Survey (FIES). Unlike past research works, it provides a comprehensive overview of the effect of remittance on spending behavior by looking not only at common categories like food, education, and housing but also vices like tobacco and alcohol. It addresses some methodological issues in examining remittance effects. These are the presence of zero expenditures, heterogeneity of the nationally representative sample, and inaccuracy of the FIES data on remittance. Zero expenditures were taken into account by using the censored Tobit model while heterogeneity was addressed by employing the Quantile Regression technique. Also, the FIES data on remittances was corrected by excluding the investment and pension components from the original remittance data used by past studies to arrive at more accurate estimate of remittances sent by family members working abroad and its effects. The study found that while there are evidences that households receiving remittances tend to consume more conspicuously on consumer items, they also invest more on education, housing, medical care, and durable goods. There is no clear relationship though between remittances and tobacco and alcohol.

Citations

This publication has been cited 14 times

In other Publications
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  9. Racelis, Rachel H., Michael R.M. Abrigo, and J.M. Ian Salas. 2015. Financing consumption over the lifecycle and overseas workers’ remittances: Findings from the 1999 and 2007 Philippine national transfer accounts. The Journal of the Economics of Ageing, 5(C), 69-78. Elsevier.
  10. Randazzo, Teresa and Matloob Piracha. 2019. Remittances and household expenditure behaviour: Evidence from Senegal. Economic Modelling, 79(C), 141-153. Elsevier.
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