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MICROECONOMIC IMPACT OF REMITTANCES AT THE HOUSEHOLD LEVEL IN A REMITTANCE RECEIVING COUNTRY, BANGLADESH
Corresponding Author(s) : Md. Shahadat Hossain
Humanities & Social Sciences Reviews,
Vol. 8 No. 3 (2020): May
Abstract
Purpose of the study: This paper aims to investigate the microeconomic impact of remittances at the household level in Bangladesh, which is one of the top remittance receiver’s countries in the world. The microeconomic factors, which have been include in this research, are per Capital consumption, per Capital food expenditure, poverty rate, health expenditure, education expenditure, and calorie intake.
Methodology: The propensity Score Matching (PSM) technique has been applied to present the issue of self-selection associated with the migration decision and the scope of the receiving remittances. Based on the survey results of Household Income and Expenditure Survey (HIES) 2016 conducted in Bangladesh, this study includes the Microeconomic impact of remittances on the household level in Bangladesh including some variables such as the size of household, food calorie, expenditure on health and education, etc.
Main Findings: Results show that the remittances have a significant microeconomic impact at the household level in Bangladesh. However, some of the findings are consistent with previous studies, while some others are not. Implications of the study have been discussed along with the concluding remarks.
Applications of this study: The study can be useful for the government and house decision-makers to utilize the remittances sent by expatriates at the household level.
Novelty/Originality of this study: There are no recent studies on the microeconomic impact of remittances at the household level in Bangladesh using the most recent survey, i.e. Household Income and Expenditure Survey (HIES) 2016. Previous studies were conducted based on Household Income and Expenditure Survey (HIES) 2010. Hence, this study contributes to the body of knowledge with recent variations on the microeconomic impact of remittances at the household level in a remittance-receiving country.
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- Abubakar, O. I., & Folawewo, A. (2019). The impact of remittances on household investment in Nigeria. International Journal of Business and Economic Development, 7(2), 38-59. https://www.econstor.eu/bitstream/10419/200990/1/full-4.pdf DOI: https://doi.org/10.24052/IJBED/V07N02/ART-05
- Acosta, P., Calderón, C., Fajnzylber, P., and López, H. (2008). What is the Impact of International Migrant Remittances on Poverty and Inequality in Latin America? World Development. 36(1), 89-114. https://doi.org/10.1016/j.worlddev.2007.02.016 DOI: https://doi.org/10.1016/j.worlddev.2007.02.016
- Adaawen, S.A., and Owusu, B. (2014). North-South migration and remittances in Ghana, African Review of Economics and Finance, 5(1), 1-39. https://www.ajol.info/index.php/aref/article/view/104954
- Adams Jr, R. H., & Cuecuecha, A. (2010). Remittances, household expenditure, and investment in Guatemala. World Development, 38(11), 1626-1641. https://doi.org/10.1016/j.worlddev.2010.03.003 DOI: https://doi.org/10.1016/j.worlddev.2010.03.003
- Amakom, U., & Iheoma, C. G. (2014). Impact of migrant remittances on health and education outcomes in sub-Saharan Africa. IOSR Journal Of Humanities And Social Science, 19(8), 33-44. http://www.iosrjournals.org/iosr-jhss/papers/Vol19-issue8/Version-1/G019813344.pdf DOI: https://doi.org/10.9790/0837-19813344
- Amuedo-Dorantes, C., and Pozo S. (2004). Workers" Remittances and the Real Exchange Rate:A Paradox of Gifts. World Development 32 (8), 1407-1417. https://doi:10.1016/j.worlddev.2004.02.004 DOI: https://doi.org/10.1016/j.worlddev.2004.02.004
- Antén, J. I. (2010). The impact of remittances on the nutritional status of children in Ecuador. International migration review, 44(2), 269-299. https://doi.org/10.1111%2Fj.1747-7379.2010.00806.x DOI: https://doi.org/10.1111/j.1747-7379.2010.00806.x
- Arif, I., Raza, S. A., Friemann, A., & Suleman, M. T. (2019). The role of remittances in the development of higher education: Evidence from top remittance-receiving countries. Social Indicators Research, 141(3), 1233-1243. https://doi.org/10.1007/s11205-018-1857-8 DOI: https://doi.org/10.1007/s11205-018-1857-8
- Becker, S. O., & Ichino, A. (2002), Estimation of average treatment effects based on propensity scores. The Stata Journal, 2(4), pp. 358-377. https://doi.org/10.1177%2F1536867X0200200403 DOI: https://doi.org/10.1177/1536867X0200200403
- Bayar, Y. (2015). Impact of Remittances on Economic Growth in the Transitional Economies of the European Union. Petroleum-Gas University of Ploiesti Bulletin, Technical Series, 67(3). https://pdfs.semanticscholar.org/bed6/be231e0c7ed52dd4824ad7000a6b673e7ac0.pdf
- Black, R., King, R. and Tiemoko, R. (2003), "Migration, return and small enterprise development in Ghana: a route out of poverty?", Sussex Migration Working Paper No. 9, Brighton. http://sro.sussex.ac.uk/id/eprint/11873/
- Calero, C., Bedi, A. S., & Sparrow, R. (2009). Remittances, liquidity constraints, and human capital investments in Ecuador. World Development, 37(6), 1143-1154. https://doi.org/10.1016/j.worlddev.2008.10.006 DOI: https://doi.org/10.1016/j.worlddev.2008.10.006
- Chalise, B. (2014). Remittance and its effect on entrepreneurial activities: a case study from Kandebas village development committee, Nepal. IZMIR Review of Social Sciences, 2(1).
- Chezum, B., Bansak, C., & Giri, A. (2018). Are Remittances Good for Your Health? Remittances and Nepal's National Healthcare Policy. Eastern Economic Journal, 44(4), 594-615. http://link.springer.com/10.1057/s41302-018-0106-9 DOI: https://doi.org/10.1057/s41302-018-0106-9
- Cuecuecha, A., & Adams, R. J. (2016). Remittances, household investment, and poverty in Indonesia. Journal of Finance and Economics, 4(3), 12-31.http://dx.doi.org/10.12735/jfe.v4n3p12 DOI: https://doi.org/10.12735/jfe.v4n3p12
- Das, A., & Chowdhury, M. (2019). Macroeconomic impacts of remittances in Bangladesh: The role of reverse flows. Economic Notes: Review of Banking, Finance, and Monetary Economics, 48(3), e12139. https://doi.org/10.1111/ecno.12139 DOI: https://doi.org/10.1111/ecno.12139
- Dehejia, R. H., & Wahba, S. (1999). Causal effects in nonexperimental studies: Reevaluating the evaluation of training programs. Journal of the American statistical Association, 94(448), 1053-1062. DOI: https://doi.org/10.1080/01621459.1999.10473858
- Hasan, (2018), Expatriate welfare minister: Government keen to provide relevant training to migrant workers. https://www.dhakatribune.com/bangladesh/dhaka/2018/04/18/expatriate-welfare-minister-government-keen-provide-relevant-training-migrant-workers
- Heckman, J. J., Ichimura, H., & Todd, P. (1998). Matching as an econometric evaluation estimator. Review of Economic Studies, 65(2), pp. 261-294. DOI: https://doi.org/10.1111/1467-937X.00044
- Hines, A. L., & Simpson, N. B. (2019). Migration, remittances, and human capital investment in Kenya. Economic Notes: Review of Banking, Finance, and Monetary Economics, 48(3), e12142. https://doi.org/10.1111/ecno.12142 DOI: https://doi.org/10.1111/ecno.12142
- International Household Survey Network, (2019). Household Income and Expenditure Survey 2010. https://catalog.ihsn.org/index.php/catalog/2257
- Kakhkharov, J. (2019). Migrant remittances as a source of financing for entrepreneurship. International Migration, 57(5), 37-55. https://doi.org/10.1111/imig.12531 DOI: https://doi.org/10.1111/imig.12531
- Kamal, M., & Rana, E. A. (2019). Do Internal and International Remittances Affect Households' Expenditure and Asset Accumulation Differently? Evidence From Bangladesh. The Journal of Developing Areas, 53(2). https://ideas.repec.org/a/jda/journl/vol.53year2019issue2pp139-153.html DOI: https://doi.org/10.1353/jda.2019.0026
- Kangmennaang, J., Bezner-Kerr, R., & Luginaah, I. (2018). Impact of migration and remittances on household welfare among rural households in Northern and Central Malawi. Migration and development, 7(1), 55-71. https://doi.org/10.1080/21632324.2017.1325551 DOI: https://doi.org/10.1080/21632324.2017.1325551
- López-Cevallos, D. F., & Chi, C. (2012). Migration, remittances, and health care utilization in Ecuador. Revista Panamericana de Salud Pública, 31, 9-16. https://www.scielosp.org/article/rpsp/2012.v31n1/9-16/ DOI: https://doi.org/10.1590/S1020-49892012000100002
- Munyegera, G. K., & Matsumoto, T. (2016). Mobile Money, Remittances, and Household Welfare: Panel Evidence from Rural Uganda. World Development, 79, 127–137. https://doi.org/10.1016/j.w orlddev.2015.11.006 DOI: https://doi.org/10.1016/j.worlddev.2015.11.006
- Orrenius, P. M., Zavodny, M., Canas, J., & Coronado, R. (2010). Do remittances boost economic development-evidence from Mexican states?Law & Bus. Rev. Am., 16, 803. https://www.dallasfed.org/~ /media/documents/research/papers/2010/wp1007.pdf DOI: https://doi.org/10.24149/wp1007
- Quartey, P. (2006). The impact of migrant remittances on household welfare in Ghana. African Economic Research Consortium. https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/2669
- Quartey, P., Ackah, C., & Lambon-Quayefio, M. P. (2019). Inter-linkages between remittance and savings in Ghana. International Journal of Social Economics. 46(1), 152-166. https://doi.org/10.1108/IJSE-12-2017-0618 DOI: https://doi.org/10.1108/IJSE-12-2017-0618
- Regmi, M., Paudel, K. P., & Mishra, A. (2016). Impact of remittance on food security in Bangladesh. Food security in a food abundant world: An individual country perspective, 16. https://ideas.repec.org/h/eme/fegpzz/s1574-871520150000016006.html DOI: https://doi.org/10.1108/S1574-871520150000016006
- Rosenbaum, P. R., & Rubin, D. B. (1983). Assessing sensitivity to an unobserved binary covariate in an observational study with binary outcome. Journal of the Royal Statistical Society: Series B (Methodological), 45(2), 212-218. DOI: https://doi.org/10.1111/j.2517-6161.1983.tb01242.x
- Rosenbaum, P. R., & Rubin, D. B. (1985). Constructing a control group using multivariate matched sampling methods that incorporate the propensity score. The American Statistician, 39(1), 33-38. DOI: https://doi.org/10.1080/00031305.1985.10479383
- Siddique, A, Selvanathan, E. A., & Selvanathan, S. (2012). Remittances and economic growth: empirical evidence from Bangladesh, India, and Sri Lanka. Journal of development studies, 48(8), 1045-1062. https://doi.org/10.1080/00220388.2012.663904 DOI: https://doi.org/10.1080/00220388.2012.663904
- Sikder, M. J. U., & Higgins, V. (2017). Remittances and social resilience of migrant households in rural Bangladesh. Migration and development, 6(2), 253-275. https://doi.org/10.1080/00220388.2012.663904 DOI: https://doi.org/10.1080/21632324.2016.1142752
- Taylor, J. E., (1999) ‘The new economics of labour migration and the role of remittances in the migration process’, International Migration 37(1): 63/88. https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-2435.00066 DOI: https://doi.org/10.1111/1468-2435.00066
- Wadood, S. N., & Hossain, A. (2017). Microeconomic impact of remittances on household welfare: Evidence from Bangladesh. Business and Economic Horizons, 13(1), 10-29. http://dx.doi.org/10.15208/beh.2017.02 DOI: https://doi.org/10.15208/beh.2017.02
- World Bank, (2019) Data release: Remittances to low- and middle-income countries on track to reach $551 billion in 2019 and $597 billion by 2021. http://blogs.worldbank.org/peoplemove/data-release-remittances-low-and-middle-income-countries-track-reach-551-billion-2019
- World Bank (2019) Bangladesh Economy Continues Robust Growth with Rising Exports and Remittances. https://www.worldbank.org/en/news/press-release/2019/10/10/world-bank-bangladesh-economy-continues-robust-growth-with-rising-exports-and-remittances
- Zhunio, M. C., Vishwasrao, S., & Chiang, E. P. (2012). The influence of remittances on education and health outcomes: a cross country study. Applied Economics, 44(35), 4605-4616. https://doi.org/10.1080/0003 6846.2011.593499 DOI: https://doi.org/10.1080/00036846.2011.593499
References
Abubakar, O. I., & Folawewo, A. (2019). The impact of remittances on household investment in Nigeria. International Journal of Business and Economic Development, 7(2), 38-59. https://www.econstor.eu/bitstream/10419/200990/1/full-4.pdf DOI: https://doi.org/10.24052/IJBED/V07N02/ART-05
Acosta, P., Calderón, C., Fajnzylber, P., and López, H. (2008). What is the Impact of International Migrant Remittances on Poverty and Inequality in Latin America? World Development. 36(1), 89-114. https://doi.org/10.1016/j.worlddev.2007.02.016 DOI: https://doi.org/10.1016/j.worlddev.2007.02.016
Adaawen, S.A., and Owusu, B. (2014). North-South migration and remittances in Ghana, African Review of Economics and Finance, 5(1), 1-39. https://www.ajol.info/index.php/aref/article/view/104954
Adams Jr, R. H., & Cuecuecha, A. (2010). Remittances, household expenditure, and investment in Guatemala. World Development, 38(11), 1626-1641. https://doi.org/10.1016/j.worlddev.2010.03.003 DOI: https://doi.org/10.1016/j.worlddev.2010.03.003
Amakom, U., & Iheoma, C. G. (2014). Impact of migrant remittances on health and education outcomes in sub-Saharan Africa. IOSR Journal Of Humanities And Social Science, 19(8), 33-44. http://www.iosrjournals.org/iosr-jhss/papers/Vol19-issue8/Version-1/G019813344.pdf DOI: https://doi.org/10.9790/0837-19813344
Amuedo-Dorantes, C., and Pozo S. (2004). Workers" Remittances and the Real Exchange Rate:A Paradox of Gifts. World Development 32 (8), 1407-1417. https://doi:10.1016/j.worlddev.2004.02.004 DOI: https://doi.org/10.1016/j.worlddev.2004.02.004
Antén, J. I. (2010). The impact of remittances on the nutritional status of children in Ecuador. International migration review, 44(2), 269-299. https://doi.org/10.1111%2Fj.1747-7379.2010.00806.x DOI: https://doi.org/10.1111/j.1747-7379.2010.00806.x
Arif, I., Raza, S. A., Friemann, A., & Suleman, M. T. (2019). The role of remittances in the development of higher education: Evidence from top remittance-receiving countries. Social Indicators Research, 141(3), 1233-1243. https://doi.org/10.1007/s11205-018-1857-8 DOI: https://doi.org/10.1007/s11205-018-1857-8
Becker, S. O., & Ichino, A. (2002), Estimation of average treatment effects based on propensity scores. The Stata Journal, 2(4), pp. 358-377. https://doi.org/10.1177%2F1536867X0200200403 DOI: https://doi.org/10.1177/1536867X0200200403
Bayar, Y. (2015). Impact of Remittances on Economic Growth in the Transitional Economies of the European Union. Petroleum-Gas University of Ploiesti Bulletin, Technical Series, 67(3). https://pdfs.semanticscholar.org/bed6/be231e0c7ed52dd4824ad7000a6b673e7ac0.pdf
Black, R., King, R. and Tiemoko, R. (2003), "Migration, return and small enterprise development in Ghana: a route out of poverty?", Sussex Migration Working Paper No. 9, Brighton. http://sro.sussex.ac.uk/id/eprint/11873/
Calero, C., Bedi, A. S., & Sparrow, R. (2009). Remittances, liquidity constraints, and human capital investments in Ecuador. World Development, 37(6), 1143-1154. https://doi.org/10.1016/j.worlddev.2008.10.006 DOI: https://doi.org/10.1016/j.worlddev.2008.10.006
Chalise, B. (2014). Remittance and its effect on entrepreneurial activities: a case study from Kandebas village development committee, Nepal. IZMIR Review of Social Sciences, 2(1).
Chezum, B., Bansak, C., & Giri, A. (2018). Are Remittances Good for Your Health? Remittances and Nepal's National Healthcare Policy. Eastern Economic Journal, 44(4), 594-615. http://link.springer.com/10.1057/s41302-018-0106-9 DOI: https://doi.org/10.1057/s41302-018-0106-9
Cuecuecha, A., & Adams, R. J. (2016). Remittances, household investment, and poverty in Indonesia. Journal of Finance and Economics, 4(3), 12-31.http://dx.doi.org/10.12735/jfe.v4n3p12 DOI: https://doi.org/10.12735/jfe.v4n3p12
Das, A., & Chowdhury, M. (2019). Macroeconomic impacts of remittances in Bangladesh: The role of reverse flows. Economic Notes: Review of Banking, Finance, and Monetary Economics, 48(3), e12139. https://doi.org/10.1111/ecno.12139 DOI: https://doi.org/10.1111/ecno.12139
Dehejia, R. H., & Wahba, S. (1999). Causal effects in nonexperimental studies: Reevaluating the evaluation of training programs. Journal of the American statistical Association, 94(448), 1053-1062. DOI: https://doi.org/10.1080/01621459.1999.10473858
Hasan, (2018), Expatriate welfare minister: Government keen to provide relevant training to migrant workers. https://www.dhakatribune.com/bangladesh/dhaka/2018/04/18/expatriate-welfare-minister-government-keen-provide-relevant-training-migrant-workers
Heckman, J. J., Ichimura, H., & Todd, P. (1998). Matching as an econometric evaluation estimator. Review of Economic Studies, 65(2), pp. 261-294. DOI: https://doi.org/10.1111/1467-937X.00044
Hines, A. L., & Simpson, N. B. (2019). Migration, remittances, and human capital investment in Kenya. Economic Notes: Review of Banking, Finance, and Monetary Economics, 48(3), e12142. https://doi.org/10.1111/ecno.12142 DOI: https://doi.org/10.1111/ecno.12142
International Household Survey Network, (2019). Household Income and Expenditure Survey 2010. https://catalog.ihsn.org/index.php/catalog/2257
Kakhkharov, J. (2019). Migrant remittances as a source of financing for entrepreneurship. International Migration, 57(5), 37-55. https://doi.org/10.1111/imig.12531 DOI: https://doi.org/10.1111/imig.12531
Kamal, M., & Rana, E. A. (2019). Do Internal and International Remittances Affect Households' Expenditure and Asset Accumulation Differently? Evidence From Bangladesh. The Journal of Developing Areas, 53(2). https://ideas.repec.org/a/jda/journl/vol.53year2019issue2pp139-153.html DOI: https://doi.org/10.1353/jda.2019.0026
Kangmennaang, J., Bezner-Kerr, R., & Luginaah, I. (2018). Impact of migration and remittances on household welfare among rural households in Northern and Central Malawi. Migration and development, 7(1), 55-71. https://doi.org/10.1080/21632324.2017.1325551 DOI: https://doi.org/10.1080/21632324.2017.1325551
López-Cevallos, D. F., & Chi, C. (2012). Migration, remittances, and health care utilization in Ecuador. Revista Panamericana de Salud Pública, 31, 9-16. https://www.scielosp.org/article/rpsp/2012.v31n1/9-16/ DOI: https://doi.org/10.1590/S1020-49892012000100002
Munyegera, G. K., & Matsumoto, T. (2016). Mobile Money, Remittances, and Household Welfare: Panel Evidence from Rural Uganda. World Development, 79, 127–137. https://doi.org/10.1016/j.w orlddev.2015.11.006 DOI: https://doi.org/10.1016/j.worlddev.2015.11.006
Orrenius, P. M., Zavodny, M., Canas, J., & Coronado, R. (2010). Do remittances boost economic development-evidence from Mexican states?Law & Bus. Rev. Am., 16, 803. https://www.dallasfed.org/~ /media/documents/research/papers/2010/wp1007.pdf DOI: https://doi.org/10.24149/wp1007
Quartey, P. (2006). The impact of migrant remittances on household welfare in Ghana. African Economic Research Consortium. https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/2669
Quartey, P., Ackah, C., & Lambon-Quayefio, M. P. (2019). Inter-linkages between remittance and savings in Ghana. International Journal of Social Economics. 46(1), 152-166. https://doi.org/10.1108/IJSE-12-2017-0618 DOI: https://doi.org/10.1108/IJSE-12-2017-0618
Regmi, M., Paudel, K. P., & Mishra, A. (2016). Impact of remittance on food security in Bangladesh. Food security in a food abundant world: An individual country perspective, 16. https://ideas.repec.org/h/eme/fegpzz/s1574-871520150000016006.html DOI: https://doi.org/10.1108/S1574-871520150000016006
Rosenbaum, P. R., & Rubin, D. B. (1983). Assessing sensitivity to an unobserved binary covariate in an observational study with binary outcome. Journal of the Royal Statistical Society: Series B (Methodological), 45(2), 212-218. DOI: https://doi.org/10.1111/j.2517-6161.1983.tb01242.x
Rosenbaum, P. R., & Rubin, D. B. (1985). Constructing a control group using multivariate matched sampling methods that incorporate the propensity score. The American Statistician, 39(1), 33-38. DOI: https://doi.org/10.1080/00031305.1985.10479383
Siddique, A, Selvanathan, E. A., & Selvanathan, S. (2012). Remittances and economic growth: empirical evidence from Bangladesh, India, and Sri Lanka. Journal of development studies, 48(8), 1045-1062. https://doi.org/10.1080/00220388.2012.663904 DOI: https://doi.org/10.1080/00220388.2012.663904
Sikder, M. J. U., & Higgins, V. (2017). Remittances and social resilience of migrant households in rural Bangladesh. Migration and development, 6(2), 253-275. https://doi.org/10.1080/00220388.2012.663904 DOI: https://doi.org/10.1080/21632324.2016.1142752
Taylor, J. E., (1999) ‘The new economics of labour migration and the role of remittances in the migration process’, International Migration 37(1): 63/88. https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-2435.00066 DOI: https://doi.org/10.1111/1468-2435.00066
Wadood, S. N., & Hossain, A. (2017). Microeconomic impact of remittances on household welfare: Evidence from Bangladesh. Business and Economic Horizons, 13(1), 10-29. http://dx.doi.org/10.15208/beh.2017.02 DOI: https://doi.org/10.15208/beh.2017.02
World Bank, (2019) Data release: Remittances to low- and middle-income countries on track to reach $551 billion in 2019 and $597 billion by 2021. http://blogs.worldbank.org/peoplemove/data-release-remittances-low-and-middle-income-countries-track-reach-551-billion-2019
World Bank (2019) Bangladesh Economy Continues Robust Growth with Rising Exports and Remittances. https://www.worldbank.org/en/news/press-release/2019/10/10/world-bank-bangladesh-economy-continues-robust-growth-with-rising-exports-and-remittances
Zhunio, M. C., Vishwasrao, S., & Chiang, E. P. (2012). The influence of remittances on education and health outcomes: a cross country study. Applied Economics, 44(35), 4605-4616. https://doi.org/10.1080/0003 6846.2011.593499 DOI: https://doi.org/10.1080/00036846.2011.593499