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Remittances, Banking Status and the Usage of Insurance Schemes

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  • Dorothee Crayen
  • Christa Hainz

    ()

  • Christiane Ströh de Martinez

Abstract

Empirical evidence that migrants send home more remittances after disasters raises the question of whether remittances can be used to self-insure, substituting for both formal and informal insurance. We investigate this question using a unique data set on the usage patterns of financial services by households in South Africa. We show that the likelihood that a respondent has a formal funeral cover increases with income and banking status. However, it is lower for individuals receiving remittances, which supports the idea that remittances act as (self-) insurance. We also show that purchasing formal funeral cover is influenced by other risk management strategies and that determinants of informal insurance differ from those of formal insurance.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2010/wp-cesifo-2010-07/cesifo1_wp3117.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3117.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3117

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Keywords: remittances; insurance; risk management strategies;

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References

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  1. Phillippe G. Leite & Terry McKinley & Rafael Guerreiro Osório, 2006. "The Post-Apartheid Evolution of Earnings Inequality in South Africa, 1995-2004," Working Papers 32, International Policy Centre for Inclusive Growth.
  2. Roth, Jimmy, 2000. "Informal micro-finance schemes : the case of funeral insurance in South Africa," ILO Working Papers 344891, International Labour Organization.
  3. Morduch, J., 1995. "Income Smoothing and Consumption Smoothing," Papers 512, Harvard - Institute for International Development.
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  8. Jean-Paul Azam & Flore Gubert, 2006. "Migrants' Remittances and the Household in Africa: A Review of Evidence," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 426-462, December.
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  10. HwaJung Choi, 2007. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," World Bank Economic Review, World Bank Group, vol. 21(2), pages 219-248, May.
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  12. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.
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  17. Thankom Arun & Susan Steiner, 2008. "Micro-Insurance in the Context of Social Protection," Brooks World Poverty Institute Working Paper Series 5508, BWPI, The University of Manchester.
  18. Daryl Collins, 2005. "Financial instruments of the poor: Initial findings from the financial diaries study," SALDRU/CSSR Working Papers 130, Southern Africa Labour and Development Research Unit, University of Cape Town.
  19. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
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  22. Maurizio Bussolo & María Soledad Martínez Peria & César Calderón & Yira Mascaró & Mette E. Nielsen & Pablo Acosta & J. Humberto López & Çaglar Özden & Yoko Niimi & Luis Molina & Florencia Moiz, . "Remittances and Development: Lessons from Latin America," IDB Publications 59678, Inter-American Development Bank.
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Cited by:
  1. Michael Funke & Yu-Fu Chen, 2010. "Global warming and extreme events: Rethinking the timing and intensity of environment policy," Quantitative Macroeconomics Working Papers 21007b, Hamburg University, Department of Economics.
  2. Dorothee Crayen & Christa Hainz & Christiane Ströh de Martínez, 2011. "Zur Versicherungsfunktion von Rücküberweisungen von Migranten: Eine Untersuchung in Südafrika," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(10), pages 17-21, 05.

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