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Migration as a Safety Net and Effects of Remittances on Household Consumption: The Case of Colombia

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  • Lina Cardona Sosa
  • Carlos Medina

Abstract

We assess whether international remittances affect Colombian household´s expenditure composition and demand of education. We exploit the migratory wave that took place on late 90s due to one of the deepest crises in Colombian history, along with institutional barriers to migration, to identify the effect of remittances on expenditure composition. The empirical exercises find a positive effect over education, beneficiary households expending about 10% of total expenditure more in education than non beneficiaries. In addition although no effect was found on enrollment rates, we found an important effect on the probability of attending a private, rather that a public, educational institution. Such effect is on average 24% for individuals 5-30 years old, 50% for those attending secondary education, and 40% for those attending higher education. On the other hand, effects over consumption, investment and health expenditure, are nil. Finally, we find important effects of remittances on living standards of beneficiary households.

Suggested Citation

  • Lina Cardona Sosa & Carlos Medina, 2006. "Migration as a Safety Net and Effects of Remittances on Household Consumption: The Case of Colombia," Borradores de Economia 3219, Banco de la Republica.
    • Handle: RePEc:col:000094:003219
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    References listed on IDEAS

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    1. Borjas, George J & Bronars, Stephen G, 1991. "Immigration and the Family," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 123-148, April.
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    Cited by:

    1. Tabuga, Aubrey D., 2007. "International Remittances and Household Expenditures: the Philippine Case," Discussion Papers DP 2007-18, Philippine Institute for Development Studies.
    2. Mauricio Cárdenas & Carlos Medina & Andrés Trejos, 2010. "Measuring Economic and Social Impacts of Migration in Colombia: New evidence," Borradores de Economia 601, Banco de la Republica de Colombia.
    3. Carlos Medina & Lina Cardona, 2010. "The Effects of Remittances on Household Consumption, Education Attendance and Living Standards: the Case of Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 72, pages 11-44.
    4. Juan D. Barón, 2010. "Geografía económica de los Andes Occidentales de Colombia," Documentos de trabajo sobre Economía Regional y Urbana 123, Banco de la Republica de Colombia.
    5. Démurger, Sylvie & Wang, Xiaoqian, 2016. "Remittances and expenditure patterns of the left behinds in rural China," China Economic Review, Elsevier, vol. 37(C), pages 177-190.
    6. Leonardo Bonilla-Mejía, 2017. "Choques externos y remesas internacionales en las regiones de Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 35(84), pages 189-202, December.
    7. Aaron Levi Garavito-Acosta & Maria Mercedes Collazos-Gaitan & Manuel Dario Hernandez-Bejarano & Enrique Montes-Uribe, 2019. "Migración internacional y determinantes de las remesas de trabajadores en Colombia," Borradores de Economia 1066, Banco de la Republica de Colombia.
    8. Clemént, Matthieu, 2011. "Remittances and Household Expenditure Patterns in Tajikistan: A Propensity Score Matching Analysis," Asian Development Review, Asian Development Bank, vol. 28(2), pages 58-87.
    9. Yavuz Arslan & Juan Contreras & Nikhil Patel & Chang Shu, 2018. "How has globalisation affected emerging market economies?," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and deglobalisation, volume 100, pages 27-55, Bank for International Settlements.
    10. Carlos Medina & Christian Manuel Posso, 2009. "Colombian and South American Immigrants in the United States of America: Education Levels, Job Qualifications and the Decision to Go Back Home," Borradores de Economia 572, Banco de la Republica de Colombia.
    11. Arango-Thomas, Luis Eduardo & Montenegro, Paola & Obando, Nataly, 2012. "El desempleo en Pereira : ¿Solo cuestión de remesas?," Chapters, in: Arango-Thomas, Luis Eduardo & Hamann-Salcedo, Franz Alonso (ed.), El mercado de trabajo en Colombia : hechos, tendencias e instituciones, chapter 17, pages 711-749, Banco de la Republica de Colombia.
    12. Michael A. Clemens & Timothy N. Ogden, 2020. "Migration and household finances: How a different framing can improve thinking about migration," Development Policy Review, Overseas Development Institute, vol. 38(1), pages 3-27, January.
    13. Luis Arango & Dolores Mata & Nataly Obando, 2015. "Echoes of the crises in Spain and US in the Colombian labor market: a differences-in-differences approach," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 6(4), pages 441-477, November.
    14. Luis Eduardo Arango & Paola Montenegro & Nataly Obando, 2011. "El desempleo en Pereira: ¿sólo cuestión de remesas?," Borradores de Economia 7871, Banco de la Republica.
    15. Sandra Liliana Botón Gómez & Patricia González Román, 2010. "Una revisión a los estudios sobre Migración Internacional en Colombia," Revista Facultad de Ciencias Económicas, Universidad Militar Nueva Granada, June.
    16. Michael Clemens and Timothy N. Ogden, 2014. "Migration as a Strategy for Household Finance: A Research Agenda on Remittances, Payments, and Development- Working Paper 354," Working Papers 354, Center for Global Development.
    17. Siriwardhane, Dinesha & Amaratunge, Sampath, 2018. "Remittances and Risk Diversification in Developing Country Context: Evidence from Sri Lanka," MPRA Paper 107235, University Library of Munich, Germany, revised 04 Jun 2018.

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    More about this item

    Keywords

    International Remittances; International Migration; Safety Net; Consumption;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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