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Migration as a Safety Net and Effects of Remittances on Household Consumption: The Case of Colombia

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  • Lina cardona Sosa

    ()

  • Carlos Medina

    ()

Abstract

We assess whether international remittances affect Colombian household’s expenditure composition and demand of education. We exploit the migratory wave that took place on late 90s due to one of the deepest crises in Colombian history, along with institutional barriers to migration, to identify the effect of remittances on expenditure composition. The empirical exercises find a positive effect over education, beneficiary households expending about 10% of total expenditure more in education than non beneficiaries. In addition although no effect was found on enrollment rates, we found an important effect on the probability of attending a private, rather that a public, educational institution. Such effect is on average 24% for individuals 5-30 years old, 50% for those attending secondary education, and 40% for those attending higher education. On the other hand, effects over consumption, investment and health expenditure, are nil. Finally, we find important effects of remittances on living standards of beneficiary households.

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Bibliographic Info

Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 414.

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Handle: RePEc:bdr:borrec:414

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Keywords: International Remittances; International Migration; Safety Net; Consumption Composition Classification JEL: F22; I31; P36.;

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  1. Ximena Cadena Ordóñez & Mauricio Cárdenas Santa María, 2004. "Las Remesas en Colombia: costos de transacción y lavado de dinero," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 003127, FEDESARROLLO.
  2. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
  3. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  4. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  5. Thomas Mroz, . "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," University of Chicago - Population Research Center 84-8, Chicago - Population Research Center.
  6. Alejandro Gaviria, 2004. "Visa Usa: Fortunas Y Extravíos De Los Emigrantes Colombianos En Los Estados Unidos," DOCUMENTOS CEDE 003766, UNIVERSIDAD DE LOS ANDES-CEDE.
  7. Borjas, George J & Bronars, Stephen G, 1991. "Immigration and the Family," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 123-48, April.
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Cited by:
  1. Aubrey D. Tabuga, 2007. "International Remittances and Household Expenditures : The Philippine Case," Development Economics Working Papers 22698, East Asian Bureau of Economic Research.
  2. Carlos Medina & Cristhian Manuel Posso, 2009. "Colombian and South American Immigrants in the United States of America: Education Levels, Job Qualifications and the Decision to Go Back Home," BORRADORES DE ECONOMIA 005758, BANCO DE LA REPÚBLICA.
  3. Clemént, Matthieu, 2011. "Remittances and Household Expenditure Patterns in Tajikistan: A Propensity Score Matching Analysis," Asian Development Review, Asian Development Bank, vol. 28(2), pages 58-87.
  4. Luis Eduardo Arango & Paola Montenegro & Nataly Obando, . "El desempleo en Pereira: ¿sólo cuestión de remesas?," Borradores de Economia 636, Banco de la Republica de Colombia.
  5. Medina, Carlos & Cardona, Lina, 2010. "The Effects of Remittances on Household Consumption, Education Attendance and Living Standards: the Case of Colombia," REVISTA LECTURAS DE ECONOMÍA, UNIVERSIDAD DE ANTIOQUIA - CIE.
  6. Sandra Liliana Botón Gómez & Patricia González Román, 2010. "Una revisión a los estudios sobre Migración Internacional en Colombia," REVISTA FACULTAD DE CIENCIAS ECONÓMICAS, UNIVERSIDAD MILITAR NUEVA GRANADA.

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