A cost-benefit analysis of overseas employment: a case study of households from 3 OFW organizations in Quezon City
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2005-10
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Abstract
This paper is a case study of the merits of Filipino overseas employment experienced by thirty households coming from three overseas Filipino worker (OFW) organizations around Quezon City. Individual household interviews were conducted to identify the benefits and costs associated with the foreign employment activity of at least one of their household members. Project evaluation methods were used to quantify the results and to determine the profitability of the activity.
Per year comparison of the total costs and total benefits of all the households taken together yielded generally positive results, with 26 years out of the total 28 year duration when at least one of the sample households sent a member abroad for employment registering larger benefits received than costs incurred. However, per household cost- benefit analysis using the net present value (NPV) criterion yielded strikingly different results, with 14 out of the 30 households examined garnering negative NPVs or the reject decision rule. This means that although aggregate results were positive, nearly half of the households examined did not profit from their investment and would have likely been better off if they did not engage in the activity. This highlights the relatively high financial risk associated with pursuing overseas employment, which is contrary to the popular notion of it being a surefire way to wealth and economic security.
Social costs, the set of unquantifiable psychological, emotional, and relationship problems and conflicts encountered as a result of the separation of household members due to the overseas employment, were also factored. Although widely judged as unquantifiable, valuations given by a clinical psychologist of how much the household would likely spend in therapy and consultations to cope with those problems were used as a rough estimation in considering its impact on the household's welfare. This further decreased the resulting NPV s of the households that incurred such costs although the relative impact of their quantification was not considerable.
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Cost-benefit analysis, Overseas employment, Labor market, OFW households, OFW