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Motives and Giving Norms Behind Remittances : The Case of Filipino Overseas Workers and their Recipient Households

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  • Michael M. Alba
  • Jessaine Soraya C. Sugui

Abstract

The literature has focused on motives to explain remittance behavior. But as non‐anonymous 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.

Suggested Citation

  • Michael M. Alba & Jessaine Soraya C. Sugui, 2009. "Motives and Giving Norms Behind Remittances : The Case of Filipino Overseas Workers and their Recipient Households," UP School of Economics Discussion Papers 200907, University of the Philippines School of Economics.
  • Handle: RePEc:phs:dpaper:200907
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    File URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/85/76
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    References listed on IDEAS

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    1. Stark, Oded & Bloom, David E, 1985. "The New Economics of Labor Migration," American Economic Review, American Economic Association, vol. 75(2), pages 173-178, May.
    2. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 17, pages 1135-1198, Elsevier.
    3. 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:

    1. 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.
    2. 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.
    3. Aísa, R. & Andaluz, J. & Larramona, G., 2011. "How does bargaining power affect remittances?," Economic Modelling, Elsevier, vol. 28(1-2), pages 47-54, January.
    4. Kazi Abdul, Mannan & Khandaker Mursheda, Farhana, 2015. "Determinants of remittances in rural Bangladesh:An econometric analysis of the educational attainments of the households," MPRA Paper 97471, University Library of Munich, Germany, revised 2015.
    5. Emara, Noha & Zhang, Yuanhao, 2021. "The non-linear impact of digitization on remittances inflow: Evidence from the BRICS," Telecommunications Policy, Elsevier, vol. 45(4).
    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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    More about this item

    Keywords

    Remittances; remittance motives; giving norms;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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