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International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks

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Author Info
Dean Yang (University of Michigan)

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Abstract

Millions of households in developing countries receive financial support from family members working overseas. How do the economic prospects of overseas migrants affect origin-household investments—in particular, in child human capital and household enterprises? 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. In addition, these positive income shocks lead to enhanced human capital accumulation and entrepreneurship in origin households. Favorable migrant shocks lead to greater child schooling, reduced child labor, and increased educational expenditure in origin households. More favorable exchange rate shocks also raise hours worked in selfemployment, and lead to greater entry into relatively capital-intensive enterprises by migrants’ origin households.

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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 531.

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Length: 54 pages
Date of creation: 2004
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Handle: RePEc:mie:wpaper:531

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Find related papers by JEL classification:
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
I2 - Health, Education, and Welfare - - Education
I3 - Health, Education, and Welfare - - Welfare and Poverty
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January. [Downloadable!] (restricted)
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  4. Dean Yang, 2004. "Why Do Migrants Return to Poor Countries? Evidence from Philippine Migrants’ Responses to Exchange Rate Shocks," Working Papers 513, Research Seminar in International Economics, University of Michigan. [Downloadable!]
    Other versions:
  5. Taylor, J Edward & Rozelle, Scott & de Brauw, Alan, 2003. "Migration and Incomes in Source Communities: A New Economics of Migration Perspective from China," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 75-101, October.
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    Other versions:
  12. Duryea, Suzanne & Lam, David & Levison, Deborah, 2007. "Effects of economic shocks on children's employment and schooling in Brazil," Journal of Development Economics, Elsevier, vol. 84(1), pages 188-214, September. [Downloadable!] (restricted)
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  16. Erik Hurst & Annamaria Lusardi, 2004. "Liquidity Constraints, Household Wealth, and Entrepreneurship," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 319-347, April. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matteo Bugamelli & Francesco Paternò, 2006. "Do Workers Remittances Reduce the Probability of Current Account Reversals?," CEP Discussion Papers dp0714, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  2. Andreas Billmeier & Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia--Institutions, Remittances, or Natural Resources?," IMF Working Papers 07/157, International Monetary Fund. [Downloadable!]
  3. Acosta, Pablo, 2006. "Labor supply, school attendance, and remittances from international migration : the case of El Salvador," Policy Research Working Paper Series 3903, The World Bank. [Downloadable!]
  4. Adams, Richard H. Jr., 2007. "International remittances and the household : analysis and review of global evidence," Policy Research Working Paper Series 4116, The World Bank. [Downloadable!]
  5. Mansuri, Ghazala, 2006. "Migration, school attainment, and child labor : evidence from rural Pakistan," Policy Research Working Paper Series 3945, The World Bank. [Downloadable!]
  6. Aggarwal, Reena & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2006. "Do workers'remittances promote financial development ?," Policy Research Working Paper Series 3957, The World Bank. [Downloadable!]
  7. Joyce J. Chen, 2006. "Migration and Imperfect Monitoring: Implications for Intra-Household Allocation," American Economic Review, American Economic Association, vol. 96(2), pages 227-231, May. [Downloadable!]
  8. Dean Yang, 2004. "Why Do Migrants Return to Poor Countries? Evidence from Philippine Migrants’ Responses to Exchange Rate Shocks," Working Papers 513, Research Seminar in International Economics, University of Michigan. [Downloadable!]
    Other versions:
  9. Krishnan Sharma, 2009. "The Impact of Remittances on Economic Insecurity," Working Papers 78, United Nations, Department of Economics and Social Affairs. [Downloadable!]
  10. Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank. [Downloadable!]
  11. Dean Yang & HwaJung Choi, 2005. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," Working Papers 535, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  12. Dean Yang, 2006. "Why Do Migrants Return to Poor Countries? Evidence From Philippine Migrants%u2019 Responses to Exchange Rate Shocks," NBER Working Papers 12396, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. David McKenzie & Hillel Rapoport, 2006. "Can migration reduce educational attainments? Depressing evidence from Mexico," CReAM Discussion Paper Series 0601, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London. [Downloadable!]
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