Overseas Filipino Workers Remittances, Inequality and Quality of Life in the Philippines

Deluna, Roperto Jr and Pedida, Sunshine (2014): Overseas Filipino Workers Remittances, Inequality and Quality of Life in the Philippines.

Abstract

This study examines the relationship among OFW remittances, inequality and quality of life in the Philippines. The study covered the period from 1990 to 2011 and employed Vector autoregressive (VAR) analysis to examine the relationship among the variables. Over the years, Human Development Index (HDI) as a measure of quality of life and remittances showed a generally increasing trend while the case is opposite for the level of inequality. Remittances and HDI has an average growth rate of 15.32% and 0.55% respectively. Inequality in the country has reduced on the average of 0.07% from 1990 to 2011. This generally implies that even in the ever increasing OFW remittances it has a very minimal effect on enhancing human development and reducing inequality in the country. Empirical results revealed that remittances has no significant effect on income inequality, however it has a significant effect on enhancing quality of life. In specific, for every unit increase in last year’s remittances, human development index will increase by 0.02. Results in granger causality revealed a bidirectional relationship between remittances and human development.

• Item Type: MPRA Paper
• Language: English
• Keywords: VAR Model, HDI, Remittances, Inequality, Quality of Life
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E0 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development

References

Acosta, P., P. Fajnzylber and J.H. Lopez, 2007.The impact of remittances on poverty and human capital: Evidence from Latin American households surveys. World Bank Policy ResearchWorking Paper 4247.

Adams, R. and J. Page 2005.Do International Migration and Remittances Reduce Poverty in Developing Countries?” World Bank. World Development Vol. 33, No. 10, pp.1645–1669.

Alcantara, M.J. 2007.Profile of overseas employment and remittance in the Philippines: 1998-2002. Undergraduate Thesis Unpublished. School of Applied Economics, University of Southeastern Philippines-Obrero Davao City, Philippines.

Amjad, R. Ed. 1989. To the Gulf and Back: Studies on the Economic Impact of Asian Labour Migration. Geneva: ILO-ARTEP, 1989.

Anyanwu, J.C. and A. E. Erhijakpor 2009. International Remittances and Economic Growth in Africa. Global Development Studies (Special Issue on Global Labor Migration and Emerging Trends in Development Finance: An Assessment of the Economic and Social Impact of Migrant (Worker) Remittances in Sub Saharan Africa), Volume Five, Winter 2008-Summer 2009, Nos. 3-4.

Balisacan, A. and S. F. Piza 2003 Nature and Causes of Income Inequality in the Philippines. Paper presented at the Conference on Comparative Analyses of East Asian Income Inequalities. Bangkok, 27 – 28 January, 2003.

Beijer, G. 1970.International and National Migratory Movements. International Migration. 8(3): 93–109. Caballero, L.N. 2010The effect of OFW remittances on poverty in the Philippines.Undergraduate Thesis Unpublished. School of Applied Economics, University of Southeastern Philippines-Obrero Davao City, Philippines.

Calero, C. 2008.Remittances, Liquidity Constraints and Human Capital Investments In Ecuador. World Development (www.elsevier/locate/worlddev).

Catrinescu, N., M. Ledesma and B. Quillin. 2006.Remittances, institutions and economic Growth. Institute for the Study of labor (IZA) discussion paper No 2139,May.http://www.iza.org/conference_files/worldb2008/piracha_m18.pdf.

Cattaneo C. 2005.International Migration and Poverty: Cross-Country Analysis. www.dagliano.unimi.it/media/Cattaneo_Cristina.pdf.

Fayissa, B. and C. Nsiah, 2008.The impact of remittances on economic growth and Development in Africa. Department of economics and finance working paper series.

Ghosh, B. 2006.Migrants Remittances and Development: Myths, Rhetoric and Realities. International Organization for Migration (IOM).

Giuliano, P. and M. R. Arranz 2008.Remittances, financial development and growth. Journal of Development Economics (www.elsevier.com/locate/econbase).

Gupta, S., C. Pattillo and Smita Wagh 2009.Effect of remittances on poverty and financial Development. World Development Vol 37 No 1.

Hyun, O. 1989. The Impact of Overseas Migration on National Development: The Case of the Republic of Korea.” To the Gulf and Back: Studies on the Economic Impact of Asian Labour Migration. Ed. Rashid Amjad. Geneva: ILO-ARTEP, 1989. 143 – 166.

Iqbal, Z. and S. Abdus Sattar 2005.The contribution of Workers Remittances to Economic Growth in Pakistan. Research Report. Pakistan Institute of Development Economics.

Jongwanic J. 2007.International migration and economic development. Lesson from low Income Countries, Edward Elgar Cheltenham UK}

Kapur, D. 2003. Remittances: the new development mantra, paper prepared for the G-24 Technical Group Meeting, 15–16 September (Geneva: Palais des Nations).

Keely, C.B. and B.N. Tran 1989. Remittances from Labour Migration: Evaluations, Performance and Implications,” International Migration Review, 23(3): 500-525.

Kuznets S.1955.Economic growth and income inequality. American Economic Review. No.45 pp 1 – 28.

Lucas, R. 2005.International Migration and Economic Development: Lessons from Low-Income Countries (Cheltenham, UK: Edward Elgar).

Ratha, D, 2003.Workers remittances: An important and Stable Source of External Development Finance. Global Development Finance, pp 157 – 172.

Sorensen, N. and P. Pedersen 2002.The migration and development Nexus: evidence and policy options. Policy study, center for Development research (CDR), Copenhagen.

Stark, O. J. E. Taylor, and S. Yitzhaki 1986.Remittances and inequality. Economic Journal. (96) pp 722 – 740. Stark, O and S. Yitzhaki 1982.Migration, growth, distribution and welfare. Economics Letters, 10(3-4), pp. 243-249.

Taylor J. E., 1992.Remittances and Inequality Reconsidered. Direct Indirect and Intertemporal Effects”, Journal of Policy Modeling, Vol. 14(2): 187 208.

Ustubici, A. and D. Irdam 2012.The impact of remittances on human development: a quantitative analysis and policy implications. Economics & Sociology;Jun2012, Vol. 5 Issue 1, p74. Article, Academic Journal.

Wimaladharma, J.P.Douglas and D. Stanton. 2004.Remittances: the New Development Finance?Small Enterprise Development(15): 12-19.

Woodruff, C. and R. Zenteno 2004.Remittances and microenterprises in Mexico. University of California, San Diego, California.