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The Impact of Aid on Recipient Behavior: A Micro-Level Dynamic Analysis of Remittances, Schooling, Work, Consumption, Investment and Social Mobility in Nicaragua

Author

Listed:
  • Lykke E. Andersen

    (Institute for Advanced Development Studies)

  • Bent Jesper Christensen

    (University of Aarhus)

  • Oscar Molina

    (Institute for Advanced Development Studies)

Abstract

Remittances are a very important source of income for many Nicaraguan families. More than 40% of all households receive remittances that on average amount to 12-15% of total household income in these households. More than 30% of these households receive remittances at least monthly, implying that it is a relatively stable source of income. This paper shows that remittances do tend to reduce the vulnerability of households and increase their upward social mobility, at least as long as the households do not depend too heavily on remittances. However, remittances also cause moral hazard problems. Nicaraguans tend to reduce their labor supply in response to more remittances, and they also tend to reduce their savings rates, both of which are detrimental to long run economic growth.

Suggested Citation

  • Lykke E. Andersen & Bent Jesper Christensen & Oscar Molina, 2005. "The Impact of Aid on Recipient Behavior: A Micro-Level Dynamic Analysis of Remittances, Schooling, Work, Consumption, Investment and Social Mobility in Nicaragua," Development Research Working Paper Series 02/2005, Institute for Advanced Development Studies.
    • Handle: RePEc:adv:wpaper:200502
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    References listed on IDEAS

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    Cited by:

    1. Lay, Jann & Schüler, Dana, 2008. "Income Diversification and Poverty in a Growing Agricultural Economy: The Case of Ghana," Proceedings of the German Development Economics Conference, Zurich 2008 39, Verein für Socialpolitik, Research Committee Development Economics.
    2. Limodio, Nicola, 2011. "The impact of pro-vulnerable income transfers : Leisure, dependency and a distribution hypothesis," Policy Research Working Paper Series 5881, The World Bank.
    3. Miguel D. Ramirez & Hari Sharma, 2009. "Remittances and Growth in Latin America: A Panel Unit Root and Panel Cointegration Analysis," Estudios Economicos de Desarrollo Internacional, Euro-American Association of Economic Development, vol. 9(1).
    4. Davis, Jason, 2018. "School enrollment effects in a South-South migration context," International Journal of Educational Development, Elsevier, vol. 62(C), pages 157-164.
    5. Schüler, Dana, 2007. "Incentive Effects of Transfers within the Extended Family: The Case of Indonesia," Proceedings of the German Development Economics Conference, Göttingen 2007 29, Verein für Socialpolitik, Research Committee Development Economics.
    6. Lykke E. Andersen & Beatriz Muriel, 2007. "Informality and Productivity in Bolivia: A Gender Differentiated Empirical Analysis," Development Research Working Paper Series 07/2007, Institute for Advanced Development Studies.

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    More about this item

    Keywords

    Remittances; aid; Nicaragua;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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