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Do remittances help smooth consumption during health shocks? Evidence from Jamaica

Author

Listed:
  • Diether W. Beuermann

    (Inter-American Development Bank)

  • Inder J. Ruprah

    (Inter-American Development Bank)

  • Ricardo E. Sierra

    (Inter-American Development Bank)

Abstract

Social networks provide an important means by which individuals and households share risk. One of the mechanisms by which informal risk sharing could be achieved is through remittances. Accordingly, this paper identifies whether and how remittances facilitate consumption smoothing during health shocks in Jamaica. In addition, we identify whether remittances are subject to moral hazard by receivers, how the informal insurance provided by remittances interacts with formal health insurance, and whether there are differential effects by gender of the household head. Overall, we find that remittances offer complete insurance towards decreased consumption during health shocks and that moral hazard is weak. The role of remittances as a social insurance mechanism, however, is only relevant in the absence of private health insurance. Public formal health insurance is found to perform a poor job as a safety net that is completely offset by the social insurance provided by remittances.

Suggested Citation

  • Diether W. Beuermann & Inder J. Ruprah & Ricardo E. Sierra, 2014. "Do remittances help smooth consumption during health shocks? Evidence from Jamaica," Working Papers 12, Peruvian Economic Association.
    • Handle: RePEc:apc:wpaper:2014-012
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    References listed on IDEAS

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    5. Al Mouskit Akim & Firmin Ayivodji & Jeffrey Kouton, 2021. "Do Remittances Mitigate COVID-19 Employment Shock on Food Insecurity? Evidence from Nigeria," Working Papers 4, Africa Institute for Research in Economics and Social Sciences.

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    More about this item

    Keywords

    Consumption Smoothing; Jamaica; Remittances; Health Shocks;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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