An analysis of the impact of remittances as a percentage of household income to families of overseas Filipino workers
Date
2017-11-20
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Abstract
In the span of 10 years, the Philippines has seen a sharp increase in the number of Overseas Filipino Workers who have chosen to leave the country for opportunities abroad. In this light, the researchers trace back multiple social and economic factors in order to observe the effects of remittances both in cash or in kind to the income of families left behind by OFWs. Using data acquired from the Annual Poverty Index Survey from years 2004 to 2014, and employing the Heckman Model, the researchers find that characteristics of household head such as sex, age, and highest grade completed significantly impact the amount of remittances (as percentage of income) received by Philippine households. Moreover, the macroeconomic variables Gross Domestic Product (GDP) and domestic credit also significantly affect remittance inflows: GDP has a positive effect, suggesting that remittances mostly enter the Philippine economy in search of investment opportunities, while domestic credit has a negative effect, implying that households may view remittances as an alternative source of funds due to a lack of domestic financial development.
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OFW, remittance