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Motives and Giving Norms behind Remittances: the Case of Filipino Overseas Workers and their Recipient Households

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  • Alba, Michael M.
  • Sugui, Jessaine Soraya C.

Abstract

The literature has focused on motives to explain remittance behavior. But as nonanonymous transfers, remittances are apt to be influenced by giving norms as well. We formulate an empirical specification that takes account of remittance motives involving worker-household pairs. We find that altruism dominates the exchange motive among overseas workers who are likely to be the primary breadwinners of their recipient households. We also find that in the subsample in which overseas workers are likely to be secondary breadwinners, (a) household labor income is an endogenous explanatory variable, and (b) the error covariance of the household income and remittance selection equations is positive. A possible reason for (a) is that secondary breadwinners use household income as an imperfect signal of opportunity cost or to detect unobserved effort, i.e., moral hazard, in generating income. As for (b), we surmise that it indicates the presence of incentive-compatible mechanisms against moral hazard. On giving norms, we find that, in samples that include overseas workers who are secondary breadwinners, remittance amounts are afflicted with negative selectivity. We present evidence that this is consistent with Filipino giving practices in which everyone gives but in modest amounts.

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  • Alba, Michael M. & Sugui, Jessaine Soraya C., 2009. "Motives and Giving Norms behind Remittances: the Case of Filipino Overseas Workers and their Recipient Households," Discussion Papers DP 2009-26, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2009-26
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    8. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation," International Economic Association Series, in: L.-A. Gérard-Varet & S.-C. Kolm & J. Mercier Ythier (ed.), The Economics of Reciprocity, Giving and Altruism, chapter 7, pages 153-173, Palgrave Macmillan.
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    Cited by:

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    2. Aísa, R. & Andaluz, J. & Larramona, G., 2011. "How does bargaining power affect remittances?," Economic Modelling, Elsevier, vol. 28(1), pages 47-54.
    3. Kazi Abdul, Mannan & LJ, Fredericks, 2015. "Determinants and socioeconomic impact of remittances between Bangladesh and Italy- A multivariate analysis of religion of rural households," MPRA Paper 97467, University Library of Munich, Germany, revised 2015.
    4. Meyer, Wiebke, 2012. "Motives for remitting from Germany to Kosovo," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 69, number 69.
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    6. Meyer, Wiebke & Mollers, Judith & Buchenrieder, Gertrud, 2012. "A behavioural approach to remittances analysis," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126428, International Association of Agricultural Economists.

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    Keywords

    remittances; remittance motives; giving norms;
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