Browsing by Author "Adan, Alexandria Loreine S."

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    Differential effects of remittances and domestic income on household expenditure shares: evidence from the 2023 FIES and LFS
    (2026-01-06) Adan, Alexandria Loreine S.; Go, Edrea Beatriz O.; Solon, Orville Jose C.
    This study examines whether Filipino households treat remittance income differently than domestic income across eight expenditure categories. The analysis is framed using the Mental Accounting Theory (Thaler, 1990) and Liquidity Constraint Models (Deaton, 1991; Carrol, 1997), where remittances are treated as a distinct, non-fungible source of income to test the differential effects of remittance and domestic income on household expenditure shares. Using a merged dataset of the 2023 Labor Force Survey (LFS) and Family Income and Expenditure Survey (FIES), a Seemingly Unrelated Regression (SUR) model estimated the differential effects of remittance income and domestic income on expenditure shares. The study observed distinct differences in how households allocate remittances compared to domestic income: both income sources reduce food and drink expenditure shares, but remittances exhibit a significantly larger reduction of Php 2.22 per 10,000,000 Php compared to Php 0.72 per 10,000,000 Php for domestic income. Remittances also demonstrated larger positive effects on investment-oriented categories including education and recreation (+Php 9.48 per Php 10,000,000), housing (+Php 3.88 per Php 10,000,000), and health (+Php 2.14 per Php 10,000,00), compared with smaller effects from domestic income. These patterns indicate that households channel remittances toward long-term investments and lumpy expenditures, reinforcing the role of remittances in enhancing household welfare and underscoring the need for policies that encourage productive investments beyond immediate consumption.