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Remittances and healthcare expenditure: Human capital investment or responses to shocks? Evidence from Peru

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  • Gabriella Berloffa
  • Sara Giunti

Abstract

This paper estimates the effect of international remittances on healthcare expenditures, taking into account both the interdependence with other consumption goods and the effects of health shocks. More precisely, we assess whether the budget allocation decisions of remittance‐receiving households reveal different preferences to invest in health capital, even when the simultaneous effect that health shocks may have on the demand of remittances and on other types of nondurable expenditures is accounted for. Using data from the “Peruvian National Survey of Households,” we find that remittances have a positive impact on healthcare budget shares, net of the remittance‐related income effect and independently of the occurrance of a health shock. They also have a positive impact on housing and a negative one on other expenditure items, that is, clothing, transport, and education. Hence, our results indicate a “pure” tendency of remittance‐receiving households to devote larger shares of their budget to health capital investment, rather than to other types of consumption goods.

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  • Gabriella Berloffa & Sara Giunti, 2019. "Remittances and healthcare expenditure: Human capital investment or responses to shocks? Evidence from Peru," Review of Development Economics, Wiley Blackwell, vol. 23(4), pages 1540-1561, November.
    • Handle: RePEc:bla:rdevec:v:23:y:2019:i:4:p:1540-1561
    DOI: 10.1111/rode.12599
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    Cited by:

    1. Md Shahadath Hossain & Adesola Sunmoni, "undated". "Do Remittances Influence Household Investment Decisions? Evidence from Sub-Saharan Africa," Economics Discussion Papers em-dp2021-04, Department of Economics, University of Reading.
    2. Peter A.G. van Bergeijk, 2021. "Pandemic Economics," Books, Edward Elgar Publishing, number 20401.
    3. Mora-Rivera, Jorge & van Gameren, Edwin, 2021. "The impact of remittances on food insecurity: Evidence from Mexico," World Development, Elsevier, vol. 140(C).
    4. Rabia Arif & Theresa Thompson Chaudhry & Azam Amjad Chaudhry, 2023. "Emigration’s Heterogeneous Impact on Children’s Wellbeing in Punjab, Pakistan," Child Indicators Research, Springer;The International Society of Child Indicators (ISCI), vol. 16(3), pages 1251-1295, June.
    5. Mohammed Anam Akhtar & Imran Khan & and Khurram Ajaz Khan, 2023. "Linking Financial Capability, Advice, Anxiety, Social Security, and Residential Status with Outward Remittances: Evidence from the UAE," Contemporary Review of the Middle East, , vol. 10(4), pages 386-407, December.
    6. Bukari, Chei & Broermann, Shanaz & Okai, Davidson, 2021. "Energy poverty and health expenditure: Evidence from Ghana," Energy Economics, Elsevier, vol. 103(C).

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