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Remittances, household expenditure and investment in Guatemala

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  • Adams, Richard H. Jr.

Abstract

The author uses a large household data set from Guatemala to analyze how the receipt of internal remittances (from Guatemala) and international remittances (from the United States) affects the marginal spending behavior of households on various consumption and investment goods. Contrary to other studies, the author finds that households receiving remittances actually spend less at the margin on consumption-food and consumer goods and durables-than do households receiving no remittances. Instead of spending on consumption, households receiving remittances tend to spend more on investment goods, like education, health, and housing. The analysis shows that a large amount of remittance money goes into education. At the margin, households receiving internal and international remittances spend 45 and 58 percent more, respectively, on education, than do households with no remittances. These increased expenditures on education represent investment in human capital. Like other studies, the author finds that remittance-receiving households spend more at the margin on housing. These increased expenditures on housing represent a type of investment for the migrant, as well as a means for boosting local economic development by creating new income and employment opportunities for skilled and unskilled workers.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3532.

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Date of creation: 01 Mar 2005
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Handle: RePEc:wbk:wbrwps:3532

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Keywords: Housing&Human Habitats; VN-Acb Mis -- IFC-00535908; Economic Conditions and Volatility; Health Monitoring&Evaluation; Municipal Housing and Land;

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