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Remittances, household expenditure and investment in Guatemala

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

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alexandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December. [Downloadable!] (restricted)
  3. Osili, Una Okonkwo, 2004. "Migrants and Housing Investments: Theory and Evidence from Nigeria," Economic Development and Cultural Change, University of Chicago Press, vol. 52(4), pages 821-49, July.
  4. Adams, Richard H, Jr, 1998. "Remittances, Investment, and Rural Asset Accumulation in Pakistan," Economic Development and Cultural Change, University of Chicago Press, vol. 47(1), pages 155-73, October.
  5. Ralph Chami & Samir Jahjah & Connel Fullenkamp, 2003. "Are Immigrant Remittance Flows a Source of Capital for Development," IMF Working Papers 03/189, International Monetary Fund. [Downloadable!]
  6. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nancy McCarthy & Gero Carletto & Benjamin Davis & Irini Maltsoglou, 2006. "Assessing the Impact of Massive Out-Migration on Agriculture," Working Papers 06-14, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA). [Downloadable!]
  2. Davies, Simon & Easaw, Joshy & Ghoshray, Atanu, 2006. "Mental Accounting and Remittances: A Study of Malawian Households," MPRA Paper 3603, University Library of Munich, Germany, revised Oct 2007. [Downloadable!]
  3. Bugamelli, Matteo & Paterno, Francesco, 2005. "Do workers'remittances reduce the probability of current account reversals ?," Policy Research Working Paper Series 3766, The World Bank. [Downloadable!]
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  4. Matteo Bugamelli & Francesco Paternò, 2008. "Output growth volatility and remittances," Temi di discussione (Economic working papers) 673, Bank of Italy, Economic Research Department. [Downloadable!]
  5. Taylor, J. Edward & Mora, Jorge, 2006. "Does migration reshape expenditures in rural households? Evidence from Mexico," Policy Research Working Paper Series 3842, The World Bank. [Downloadable!]
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