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

  • Claudia Martínez Alvear
  • Dean Yang

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.

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Paper provided by University of Chile, Department of Economics in its series Working Papers with number wp257.

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Date of creation: Aug 2007
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Handle: RePEc:udc:wpaper:wp257
Contact details of provider: Web page: http://www.econ.uchile.cl/

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  1. 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.
  2. Dean Yang & HwaJung Choi, 2005. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," Working Papers 535, Research Seminar in International Economics, University of Michigan.
  3. Rodrik, Dani, 2002. "Feasible Globalizations," CEPR Discussion Papers 3524, C.E.P.R. Discussion Papers.
  4. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September.
  5. Yang, Dean, 2005. "International migration, human capital, and entrepreneurship : evidence from Philippine migrants'exchange rate shocks," Policy Research Working Paper Series 3578, The World Bank.
  6. 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.
  7. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
  8. 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.
  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 329-50, January.
  10. 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.
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