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International Remittances and Household Expenditures: the Philippine Case

  • Tabuga, Aubrey D.
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    This paper examines the general relationship between remittances and household expenditures in the Philippines by doing a cross-sectional analysis of the 2003 Family Income and Expenditure Survey (FIES). Unlike past research works, it provides a comprehensive overview of the effect of remittance on spending behavior by looking not only at common categories like food, education, and housing but also vices like tobacco and alcohol. It addresses some methodological issues in examining remittance effects. These are the presence of zero expenditures, heterogeneity of the nationally representative sample, and inaccuracy of the FIES data on remittance. Zero expenditures were taken into account by using the censored Tobit model while heterogeneity was addressed by employing the Quantile Regression technique. Also, the FIES data on remittances was corrected by excluding the investment and pension components from the original remittance data used by past studies to arrive at more accurate estimate of remittances sent by family members working abroad and its effects. The study found that while there are evidences that households receiving remittances tend to consume more conspicuously on consumer items, they also invest more on education, housing, medical care, and durable goods. There is no clear relationship though between remittances and tobacco and alcohol.

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    File URL: http://serp-p.pids.gov.ph/serp-p/download.php?d=4225&s=3
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    Paper provided by Philippine Institute for Development Studies in its series Discussion Papers with number DP 2007-18.

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    Length: 19
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:phd:dpaper:dp_2007-18
    Contact details of provider: Postal: NEDA sa Makati Building, 106 Amorsolo St., Legaspi Village, Makati City,
    Web page: http://www.pids.gov.ph/
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    1. Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-43, October.
    2. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    3. Edgard R. Rodriguez & Susan Horton, 1995. "International Return Migration and Remittances in the Philippines," Working Papers horton-95-01, University of Toronto, Department of Economics.
    4. Edgar R. Rodriguez, 1996. "International Migrants' Remittances in the Philippines," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 427-32, April.
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