Moving forward, looking back: the impact of migrants' remittances on assets, consumption, and credit constraints in sending communities in the rural Philippines

This paper investigates the impact of migration and remittances on asset holdings, consumption expenditures, and credit constraint status of households in origin communities, using a unique longitudinal data set from the Philippines. The Bukidnon Panel Study follows up 448 families in rural Mindanao who were first interviewed in 1984/85 by the International Food Policy Research Institute and the Research Institute for Mindanao Culture, Xavier University. The study interviewed the original respondents and a sample of their offspring, both those who have remained in the same area and those who have moved to a different location. This paper examines the impact of remittances from outside the original survey villages on parent households, taking into account the endogeneity of the number of migrants and remittances received to characteristics of the origin households and communities, completed schooling of sons and daughters, and shocks to both the origin households and migrants. When both migration and remittances are treated as endogenous, a larger number of migrant children reduces the values of nonland assets, total expenditures per adult equivalent, and some components of household expenditures. On the other hand, remittances have a positive impact on housing and consumer durables, nonland assets, and total expenditures (per adult equivalent). The largest impact of remittances is on the total value of nonland assets (driven by increased acquisition of consumer durables) and on educational expenditures. Thus, despite the costs that parents may incur in sending migrants to other communities, the returns, in terms of remittances, play an important role in enabling investment in assets and human capital in sending communities. Neither migration nor remittances affects current credit constraint status.