Looking behind the remittances: a counterfactual analysis of the impact of migration and remittances on poverty in the Philippines

Remittances in the Philippines, as a consequence of an increasing migration, are flowing into the country as 'manna-from-heaven'. For the majority of recipient families, remittances finance on average between 30% and 45% of their living expenses. While cross-country studies tend to overestimate the poverty reducing effects of remittances, by considering those transfers as exogenous, the counterfactual differential income earned as a result of migration, tend to lower or even vanish these effects depending on the characteristics of the migrants and their households. The present work analyzes carefully the impact of these cash transfers on poverty, determining heterogeneous results. While many authors find remittances a good poverty reduction strategy, in the Philippines the results show that the poor are not primarily engaged in migration. Therefore the initial conditions of the migrant play a role at defining its opportunities abroad.