Remittances and Household Behavior in the Philippines

35 Pages Posted: 1 Jun 2010

See all articles by Alvin Ang

Alvin Ang

University of Santo Tomas - Thomas Aquinas Research Complex

Shikha Jha

Asian Development Bank

Guntur Sugiyarto

Asian Development Bank

Date Written: December 2009

Abstract

As one of the world’s largest recipients of remittances, the Philippines received remittances roughly 12% of its gross domestic product in 2008. Remittances have become the single most important source of foreign exchange to the economy and a significant source of income for recipient families. Using the instrument variable estimation technique, this study examines the role of remittances in increasing household consumption and investment and thereby their potential for rebalancing economic growth and creating long-term human and capital investment. The results indicate that remittances negatively influence the share of food consumption in the total expenditure. However, unlike previous studies, the estimations show that remittances to the Philippines do not have a significant influence on other key items of consumption or investment such as spending on education and health care. A further analysis using logistical regression shows that remittances help to lift households out of poverty. Remittances thus may help in fighting poverty in the Philippines but not in rebalancing growth, especially in the long run.

Keywords: Remittances, migrants, household consumption, investment, poverty, Philippines

Suggested Citation

Ang, Alvin and Jha, Shikha and Sugiyarto, Guntur, Remittances and Household Behavior in the Philippines (December 2009). Asian Development Bank Economics Working Paper No. 188. Available at SSRN: https://ssrn.com/abstract=1618125 or http://dx.doi.org/10.2139/ssrn.1618125

Alvin Ang (Contact Author)

University of Santo Tomas - Thomas Aquinas Research Complex ( email )

Social Research Center
España, Manila, 1015
Philippines
632-731-3535 (Phone)

Shikha Jha

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Guntur Sugiyarto

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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