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Are Remittances Spent in a Healthy Way? Evidence from Albania

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  • Kalaj, Ermira Hoxha

Abstract

Using household survey data for Albania, the paper investigates the effect of remittances on health capital accumulation. Total expenditure is divided into two categories: expenditure on medicines and expenditure on visits and laboratory services. The estimation is presented for two separate sub-groups, rural and urban area. In the paper both instrumental variable and propensity score matching are used to give answer to the research question about the impact of remittances in the health capital investment. The findings indicate that households increase their expenditure for medicines and other health services in the presence of remittance income. The positive relationship is statistically significant in the case of remittance receiving households living in the rural area. The magnitude is lower in the case of total expenditure for visits and laboratory. However, total expenditure for visits and laboratory are likely to have significant impact on the health outcome given their prevention nature. These findings show that remittance flows pay a heterogeneous role in the decision making process of remittance-receiving household members. However, these non-labor income flows may play an important role in supporting expenditures, especially for those living in rural areas.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49172.

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Date of creation: 2010
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Handle: RePEc:pra:mprapa:49172

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Keywords: remittances; health expenditure; instrumental variable;

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References

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  1. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, Elsevier, vol. 32(1), pages 1-13, January.
  2. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 22(1), pages 31-72, 02.
  3. Acosta, Pablo A. & Lartey, Emmanuel K.K. & Mandelman, Federico S., 2009. "Remittances and the Dutch disease," Journal of International Economics, Elsevier, Elsevier, vol. 79(1), pages 102-116, September.
  4. Sascha O. Becker & Andrea Ichino & Giovanni Peri, 2004. "How Large Is the "Brain Drain" from Italy?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(1), pages 1-32, April.
  5. Talip Kilic & Calogero Carletto & Benjamin Davis & Alberto Zezza, 2009. "Investing back home," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 17(3), pages 587-623, 07.
  6. Samir Jahjah & Ralph Chami & Connel Fullenkamp, 2003. "Are Immigrant Remittance Flows a Source of Capital for Development," IMF Working Papers 03/189, International Monetary Fund.
  7. Agarwal, Reena & Horowitz, Andrew W., 2002. "Are International Remittances Altruism or Insurance? Evidence from Guyana Using Multiple-Migrant Households," World Development, Elsevier, Elsevier, vol. 30(11), pages 2033-2044, November.
  8. B. Gabriela Mundaca, 2009. "Remittances, Financial Market Development, and Economic Growth: The Case of Latin America and the Caribbean," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 13(2), pages 288-303, 05.
  9. Dean Yang, 2006. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," NBER Working Papers 12794, National Bureau of Economic Research, Inc.
  10. Azzarri, Carlo & Carletto, Calogero, 2009. "Modeling migration dynamics in Albania : a hazard function approach," Policy Research Working Paper Series 4945, The World Bank.
  11. Carlo Azzarri & Gero Carletto & Benjamin Davis & Alberto Zezza, 2006. "Choosing to Migrate or Migrating to Choose: Migration and Labour Choice in Albania," Working Papers, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) 06-06, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  12. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(5), pages 901-18, October.
  13. World Bank, 2008. "The Migration and Remittances Factbook 2008," World Bank Publications, The World Bank, number 6383, August.
  14. World Bank, 2010. "Albania - The New Growth Agenda : A Country Economic Memorandum," World Bank Other Operational Studies 2935, The World Bank.
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