Remittances and Household Welfare: Longitudinal Evidence from Urban Ethiopia

Course ID
Ethiopian Economics Association (EEA)
Bizuayehu Getachew

Two views are raised on the impact of remittances at the household level. The first view contends that remittances directly augment the income of recipient households and provide financial resources, increased household investments in education, entrepreneurship, and health. However, the second view states that remittances might have negative incentive effect which results in an increased in reservation wage and reduction in labor supply. This study examined the impact of remittances on household welfare, selectivity bias with regards to migration and remittances, and how households allocate the remittances they received from different sources. Using the Ethiopian Urban Socio-Economic Survey, descriptive and econometric methodologies are adopted. The main findings include: the amount of receipt from domestic and international sources increased during the study period, remittances are primarily used for consumption followed by expenditure for schooling. It is found that there is no selectivity bias with regards to migration and recipient of remittances. The result also confirmed that the predicted per capita annual expenditure of remittance recipient households is higher than households that do not receive remittance in both the including remittances and no remittance scenarios. Finally, panel data model is estimated and the result materializes the welfare improving impact of remittances on the welfare of recipient households.

Corporate Author:Getnet Alemun & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher:Ethiopian Economic Association (EEA)
Primary Descriptors:Remittance

Secondary Descriptor:Welfare

Geographic Descriptors:Ethiopia
Cataloge Date:02/27/2013
Broad Subject heading:Growth and Development
Call Number:330.963 PRO 2010
Serial Key Title:Proceedings of the Seventh International Conference on the Ethiopian Economy
Publication catagory:International Conference
Content type:EEA Publication
Publication date:n2013-05-27 23:10:00
Forum or Discussion date: 2013-02-27 15:02:21
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Bizuayehu Getachew