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Do Remittances Lead to a Public Moral Hazard in Developing Countries? An Empirical Investigation


  • Christian Hubert Ebeke


This article tests the hypothesis that in a context of ‘bad governance’, remittance inflows strongly reduce public spending on education and health in receiving countries; a phenomenon called the ‘public moral hazard problem’. Using a large sample of 86 developing countries over the period 1996--2007, and after factoring in the endogeneity of remittances, the results suggest a negative impact of remittances on public spending on education and health, when governance is bad in remittance-dependent economies.

Suggested Citation

  • Christian Hubert Ebeke, 2011. "Do Remittances Lead to a Public Moral Hazard in Developing Countries? An Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 48(8), pages 1009-1025, May.
  • Handle: RePEc:taf:jdevst:v:48:y:2012:i:8:p:1009-1025
    DOI: 10.1080/00220388.2011.615918

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    References listed on IDEAS

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    Cited by:

    1. Hussain, Mushahid, 2013. "Migrants’ Remittances and State Behaviour in the Neoliberal Era," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 227, Ekonomik Yaklasim Association.
    2. Jean-Louis Combes & Rasmané Ouedraogo, 2014. "Does Pro-cyclical Aid Lead to Pro-cyclical Fiscal Policy? An Empirical Analysis for Sub-Saharan Africa," Working Papers halshs-01084600, HAL.
    3. Adolfo Barajas & Ralph Chami & Christian H Ebeke & Sampawende J Tapsoba, 2012. "Workers’ Remittances; An Overlooked Channel of International Business Cycle Transmission?," IMF Working Papers 12/251, International Monetary Fund.
    4. John Ssozi & Simplice A. Asongu, 2016. "The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 400-421, September.
    5. Licuanan, Victoria & Omar Mahmoud, Toman & Steinmayr, Andreas, 2015. "The Drivers of Diaspora Donations for Development: Evidence from the Philippines," World Development, Elsevier, vol. 65(C), pages 94-109.
    6. Konte M., 2014. "Do remittances not promote growth? : a bias-adjusted three-step mixture-of-regressions," MERIT Working Papers 075, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.
    8. repec:ebl:ecbull:eb-17-00542 is not listed on IDEAS
    9. Christian H Ebeke & Boileau Loko & Arina Viseth, 2014. "Credit Quality in Developing Economies; Remittances to the Rescue?," IMF Working Papers 14/144, International Monetary Fund.
    10. repec:eee:pubeco:v:155:y:2017:i:c:p:122-137 is not listed on IDEAS
    11. Asatryan, Zareh & Bittschi, Benjamin & Doerrenberg, Philipp, 2017. "Remittances and public finances: Evidence from oil-price shocks," Journal of Public Economics, Elsevier, vol. 155(C), pages 122-137.
    12. Christian Ebeke & Thierry Yogo Urbain, 2013. "Working Paper 185 - Remittances and the Voter Turnout in Sub-Saharan Africa: Evidence from Macro and Micro Level Data," Working Paper Series 989, African Development Bank.
    13. Carine MEYIMDJUI, 2017. "Food Price Shocks and Government Expenditure Composition: Evidence from African Countries," Working Papers 201703, CERDI.

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