International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks

Dean Yang

No 12325, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Millions of households in developing countries receive financial support from family members working overseas. How do migrant earnings affect origin-household investments? This paper examines Philippine households' responses to overseas members' economic shocks. Overseas Filipinos work in dozens of foreign countries, which experienced sudden (and heterogeneous) changes in exchange rates due to the 1997 Asian financial crisis. Appreciation of a migrant's currency against the Philippine peso leads to increases in household remittances received from overseas. The estimated elasticity of Philippine-peso remittances with respect to the Philippine/foreign exchange rate is 0.60. These positive income shocks lead to enhanced human capital accumulation and entrepreneurship in migrants' origin households. Child schooling and educational expenditure rise, while child labor falls. In the area of entrepreneurship, households raise hours worked in self-employment, and become more likely to start relatively capital-intensive household enterprises.

JEL-codes: D13 F22 I2 I3 J22 J23 J24 O12 O15 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-dev, nep-ent, nep-fmk, nep-ltv and nep-sea
Note: IFM ITI LS
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Citations: View citations in EconPapers (26)

Published as Yang, Dean. "Why Do Immigrants Return To Poor Countries? Evidence From Philippine Migrants' Responses To Exchange Rate Shocks," Review of Economics and Statistics, 2006, v88(4,Nov), 715-735.
Published as Yang, Dean. "International Migration, Remittances and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks," Economic Journal, Royal Economic Society, vol. 118(528), pages 591-630.

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Journal Article: International Migration, Remittances and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks (2008)
Journal Article: International Migration, Remittances and Household Investment: Evidence from Philippine Migrants’ Exchange Rate Shocks (2008)
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