International Remittances and Household Expenditures : The Philippine Case
AbstractThis 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 addressed 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.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 22698.
Date of creation: Jan 2007
Date of revision:
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More information through EDIRC
remittances; remittance income effect; household expenditures/spending; quantile regression analysis;
Find related papers by JEL classification:
- R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- D10 - Microeconomics - - Household Behavior - - - General
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