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Remittances and Poverty in Migrants’ Home Areas: Evidence from the Philippines

Author

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  • Claudia Martínez Alvear
  • Dean Yang

Abstract

In many developing countries, remittance receipts from overseas are importantsupplements to household income. How do these remittance flows affect poverty andinequality in migrants’ home areas? To answer this question, we take advantage ofexogenous shocks to the remittance receipts of Philippine households. Filipino migrantswork in a variety of foreign countries, and experienced sudden changes in exchange ratesdue to the 1997 Asian financial crisis. Appreciation of a migrant’s currency against thePhilippine peso leads to increases in household remittance receipts, and reductions inpoverty in migrants’ origin households. We find evidence of spillovers to householdswithout migrant members, focusing on cross-regional variation in the mean exchange rateshock experienced by the region’s migrants. In regions with more favorable meanexchange rate shocks, aggregate poverty rates decline even in households withoutmigrant members. However, we find no strong evidence of effects on region-levelinequality.

Suggested Citation

  • Claudia Martínez Alvear & Dean Yang, 2007. "Remittances and Poverty in Migrants’ Home Areas: Evidence from the Philippines," Working Papers wp257, University of Chile, Department of Economics.
  • Handle: RePEc:udc:wpaper:wp257
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    References listed on IDEAS

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    1. Dean Yang, 2004. "International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks," Working Papers 531, Research Seminar in International Economics, University of Michigan.
    2. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
    3. Taylor, J. Edward, 1992. "Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects," Journal of Policy Modeling, Elsevier, vol. 14(2), pages 187-208, April.
    4. Barham, Bradford & Boucher, Stephen, 1998. "Migration, remittances, and inequality: estimating the net effects of migration on income distribution," Journal of Development Economics, Elsevier, vol. 55(2), pages 307-331, April.
    5. HwaJung Choi, 2007. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," World Bank Economic Review, World Bank Group, vol. 21(2), pages 219-248, May.
    6. Rodrik, Dani, 2002. "Feasible Globalizations," CEPR Discussion Papers 3524, C.E.P.R. Discussion Papers.
    7. Adams, Richard H, Jr, 1989. "Worker Remittances and Inequality in Rural Egypt," Economic Development and Cultural Change, University of Chicago Press, vol. 38(1), pages 45-71, October.
    8. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-740, September.
    9. Rodriguez, Edgard R, 1998. "International Migration and Income Distribution in the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 46(2), pages 329-350, January.
    10. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
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    Citations

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    Cited by:

    1. Adams, Richard H. Jr., 2006. "Remittances and poverty in Ghana," Policy Research Working Paper Series 3838, The World Bank.
    2. John Gibson & David McKenzie & Steven Stillman, 2011. "The Impacts of International Migration on Remaining Household Members: Omnibus Results from a Migration Lottery Program," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1297-1318, November.
    3. Giulia Bettin, 2012. "The remittance behaviour of African diaspora in Belgium," Economics Bulletin, AccessEcon, vol. 32(2), pages 157-157.
    4. Calbay, Francis Raymond, 2012. "Homilies as knowledge transfer platform for Filipino migrant workers in Taiwan," MPRA Paper 45947, University Library of Munich, Germany.
    5. David McKenzie & Dean Yang, 2012. "Experimental Approaches in Migration Studies," Chapters,in: Handbook of Research Methods in Migration, chapter 12 Edward Elgar Publishing.
    6. David McKenzie & John Gibson & Steven Stillman, 2007. "Moving to opportunity, leaving behind what? Evaluating the initial effects of a migration policy on incomes and poverty in source areas," New Zealand Economic Papers, Taylor & Francis Journals, pages 197-223.
    7. Leonardo Bonilla Mejía, 2016. "Choques externos y remesas internacionales en las regiones de Colombia," Documentos de trabajo sobre Economía Regional y Urbana 250, Banco de la Republica de Colombia.
    8. Nava Ashraf & Diego Aycinena & Claudia Martínez & Dean Yang, 2011. "Remittances and the Problem of Control: A Field Experiment Among Migrants from El Salvador," Working Papers wp341, University of Chile, Department of Economics.
    9. Maurice Schiff, 2008. "On the underestimation of migration’s income and poverty impact," Review of Economics of the Household, Springer, vol. 6(3), pages 267-284, September.
    10. Orbeta, Aniceto Jr. C., 2008. "Economic Impact of International Migration and Remittances on Philippine Households: What We Thought We Knew, What We Need to Know," Discussion Papers DP 2008-32, Philippine Institute for Development Studies.
    11. Calero, Carla & Bedi, Arjun S. & Sparrow, Robert, 2009. "Remittances, Liquidity Constraints and Human Capital Investments in Ecuador," World Development, Elsevier, vol. 37(6), pages 1143-1154, June.
    12. Matteo Bugamelli & Francesco Paternò, 2011. "Output Growth Volatility and Remittances," Economica, London School of Economics and Political Science, vol. 78(311), pages 480-500, July.
    13. Konrad B. Burchardi & Tarek A. Hassan, 2013. "The Economic Impact of Social Ties: Evidence from German Reunification," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1219-1271.
    14. Yang, Dean, 2009. "International Migration and Human Development," MPRA Paper 19212, University Library of Munich, Germany.
    15. Ambler, Kate, 2013. "Don’t tell on me: Experimental evidence of asymmetric information in transnational households:," IFPRI discussion papers 1312, International Food Policy Research Institute (IFPRI).
    16. Veljanoska, Stefanija, 2014. "Agricultural risk and remittances: the case of Uganda," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182788, European Association of Agricultural Economists.
    17. Jose Antonio Alonso, 2011. "International Migration and Development: A review in light of the crisis," CDP Background Papers 011, United Nations, Department of Economics and Social Affairs.
    18. Elisabetta LODIGIANI, 2009. "Diaspora Externalities as a Cornerstone of the New Brain Drain Literature," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    19. Kate Ambler & Diego Aycinena & Dean Yang, 2014. "Remittance Responses to Temporary Discounts: A Field Experiment among Central American Migrants," NBER Working Papers 20522, National Bureau of Economic Research, Inc.
    20. Beyene, Berhe Mekonnen, 2012. "The Link between International Remittances and Private Interhousehold Transfers," Memorandum 14/2012, Oslo University, Department of Economics.
    21. Luca Barbone & Andrew Dabalen, 2009. "Enhancing the development impact of migration," Bank i Kredyt, Narodowy Bank Polski, vol. 40(6), pages 59-76.

    More about this item

    Keywords

    migration; remittances; poverty; inequality; exchange rates; Philippines;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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