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Do remittances lead to a public moral hazard in developing countries? An empirical investigation

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  • Christian Hubert Ebeke

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper tests the hypothesis that in a context of 'bad governance', remittance inflows strongly reduce public spending on education and health in receiving countries; a phenomenon called the 'public moral hazard problem'. Using a large sample of 86 developing countries over the period 1996-2007, and after factoring in the endogeneity of remittances, the results suggest a negative impact of remittances on public spending on education and health, when governance is bad in remittance-dependent economies.

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  • Christian Hubert Ebeke, 2012. "Do remittances lead to a public moral hazard in developing countries? An empirical investigation," Post-Print hal-00807100, HAL.
    • Handle: RePEc:hal:journl:hal-00807100
    DOI: 10.1080/00220388.2011.615918
    Note: View the original document on HAL open archive server: https://hal.science/hal-00807100
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    Cited by:

    1. Jude Eggoh & Chrysost Bangake & Gervasio Semedo, 2019. "Do remittances spur economic growth? Evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(4), pages 391-418, May.
    2. Hussain, Mushahid, 2013. "Migrants’ Remittances and State Behaviour in the Neoliberal Era," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 227, Ekonomik Yaklasim Association.
    3. Jean-Louis Combes & Rasmané Ouedraogo, 2014. "Does Pro-cyclical Aid Lead to Pro-cyclical Fiscal Policy? An Empirical Analysis for Sub-Saharan Africa," Working Papers halshs-01084600, HAL.
    4. Mr. Christian H Ebeke & Mr. Boileau Loko & Arina Viseth, 2014. "Credit Quality in Developing Economies: Remittances to the Rescue?," IMF Working Papers 2014/144, International Monetary Fund.
    5. Chong Siew Huay & Yasmin Bani, 2023. "The Impact of Remittances on Human Capital in Sub-Saharan Countries," Information Management and Business Review, AMH International, vol. 15(3), pages 172-178.
    6. John Ssozi & Simplice A. Asongu, 2016. "The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 400-421, September.
    7. Nicolas Yol, 2017. "The ambiguous effects of remittances on health expenditure: a panel data analysis," Economics Bulletin, AccessEcon, vol. 37(4), pages 2561-2573.
    8. SeyedSoroosh Azizi, 2021. "The impacts of workers’ remittances on poverty and inequality in developing countries," Empirical Economics, Springer, vol. 60(2), pages 969-991, February.
    9. Licuanan, Victoria & Omar Mahmoud, Toman & Steinmayr, Andreas, 2015. "The Drivers of Diaspora Donations for Development: Evidence from the Philippines," World Development, Elsevier, vol. 65(C), pages 94-109.
    10. Carine Meyimdjui, 2017. "Food Price Shocks and Government Expenditure Composition: Evidence from African Countries," CERDI Working papers halshs-01457366, HAL.
    11. Konte M., 2014. "Do remittances not promote growth? : a bias-adjusted three-step mixture-of-regressions," MERIT Working Papers 2014-075, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    12. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.
    13. Konte, Maty & Ndubuisi, Gideon, 2022. "Remittance dependence, support for taxation and quality of public services in Africa," MERIT Working Papers 2022-019, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Le Thanh Tung, 2018. "The Impact Of Remittances On Domestic Investment In Developing Countries: Fresh Evidence From The Asia-Pacific Region," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 9(2).
    15. Asatryan, Zareh & Bittschi, Benjamin & Doerrenberg, Philipp, 2017. "Remittances and public finances: Evidence from oil-price shocks," Journal of Public Economics, Elsevier, vol. 155(C), pages 122-137.
    16. Christian Ebeke & Thierry Yogo Urbain, 2013. "Working Paper 185 - Remittances and the Voter Turnout in Sub-Saharan Africa: Evidence from Macro and Micro Level Data," Working Paper Series 989, African Development Bank.
    17. Carine Meyimdjui, 2017. "Food Price Shocks and Government Expenditure Composition: Evidence from African Countries," Working Papers halshs-01457366, HAL.
    18. Carine MEYIMDJUI, 2017. "Food Price Shocks and Government Expenditure Composition: Evidence from African Countries," Working Papers 201703, CERDI.
    19. Abreham Adera, 2023. "Do migrant remittances have state de-legitimizing tendencies? A micro-survey based evidence from Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2197323-219, December.
    20. Maty Konte, 2018. "Do remittances not promote growth? A finite mixture-of-regressions approach," Empirical Economics, Springer, vol. 54(2), pages 747-782, March.

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