SESSION 2: REMITTANCES GENDERED DETERMINANTS AND IMPACTS The impact of remittances and gender on household expenditure patterns: Evidence from Ghana Juan Carlos Guzmán Andrew R. Morrison Mirja Sjöblom PREM, Gender and Development Group

MOTIVATION In 2005, the total projected value of remittances exceeded $232 billion (Ratha 2005) In 2005, the total projected value of remittances exceeded $232 billion (Ratha 2005) Remittances represent an important category of capital flows to developing countries Remittances represent an important category of capital flows to developing countries Recent research emphasizes the potential of remittances to reduce poverty (Adams and Page, 2003) Recent research emphasizes the potential of remittances to reduce poverty (Adams and Page, 2003) When men and women migrate, their ability to monitor household spending is likely to change. When men and women migrate, their ability to monitor household spending is likely to change. International Migration of Women

Migration is likely to have important consequences for intra-household bargaining, for the allocation of household expenditures, and for poverty alleviation Migration is likely to have important consequences for intra-household bargaining, for the allocation of household expenditures, and for poverty alleviation But we know little about these changes…to a great extent, the nexus between remittances, bargaining and gender remains unexplored But we know little about these changes…to a great extent, the nexus between remittances, bargaining and gender remains unexplored

LITERATURE REVIEW Remittances literature: As opposed to male remitters: Female remitters function as an insurer of last resort (De la Brière et al. 2002, Lee, Parish et al. 1994) Female remitters function as an insurer of last resort (De la Brière et al. 2002, Lee, Parish et al. 1994) Female remitters are more motivated by altruism (Vanway 2004) Female remitters are more motivated by altruism (Vanway 2004) Female migrants seem to remit to pay for education, health, and other family-oriented expenditures (De La Cruz, 1995, IOM 2005) Female migrants seem to remit to pay for education, health, and other family-oriented expenditures (De La Cruz, 1995, IOM 2005) → Emerging evidence suggests that female and male remitters have different preferences for how their remittances are being spent

LITERATURE REVIEW Intrahousehold expenditure literature: Rejects the unitary household model and suggests that: Rejects the unitary household model and suggests that: There are differences in preferences between household members There are differences in preferences between household members Distribution of resources depends on individuals’ bargaining power within the household Distribution of resources depends on individuals’ bargaining power within the household Men frequently have stronger bargaining power than women Men frequently have stronger bargaining power than women Increases in resources controlled by women raise expenditure allocations toward education, health and nutrition Increases in resources controlled by women raise expenditure allocations toward education, health and nutrition

Do sex of household head and receipt of remittances affect household expenditure patterns? Do sex of household head and receipt of remittances affect household expenditure patterns? Does the sex of the remitter matter for houeshold expenditure patterns? Does the sex of the remitter matter for houeshold expenditure patterns? Two research questions:

DATA Ghana Living Standards Survey 1998/99 Ghana Living Standards Survey 1998/99 5,998 households, nationally representative 5,998 households, nationally representative Basic info on remitters’ characteristics: sex, relationship to household, place of residence Basic info on remitters’ characteristics: sex, relationship to household, place of residence Detailed expenditure data Detailed expenditure data Good data on remittances Good data on remittances But no data on characteristics of non-remitting migrants But no data on characteristics of non-remitting migrants → not able to look at determinants of remittances or analyze whether men and women have differential propensities to remit

(Do sex of household head and receipt of remittances affect household expenditure patterns?) Specification: Specification: Standard fractional logit model without instruments Standard fractional logit model without instruments Unit of analysis: household receiving remittances Unit of analysis: household receiving remittances Final sample of households: 5,998 (F=2,017; M =3,981) Final sample of households: 5,998 (F=2,017; M =3,981) Functional form: Adjusted Working-Leser curve: Functional form: Adjusted Working-Leser curve: w i = share of the budget devoted to good i x= total household expenditure n= household size z= vector of household characteristics u= error term METHODOLOGY for question #1:

Estimating equation: RR= household receiving remittances FHH= female headed households δ 1 = quasi difference-in-difference estimator, capturing the impact of being both female-headed household and receiving remittances FRR-FNR = difference in mean values between female-headed households receiving remittances (FRR) and female-headed households not receiving remittances (FNR) MRR-MNR = difference in mean values between male-headed households receiving remittances (MRR) and male-headed households not receiving remittances (MNR)

METHODOLOGY for question #2: (Does the sex of the remitter matter for household expenditure patterns?) Unit of analysis: remitter Unit of analysis: remitter Final sample of remitters: 4,011 (F=1,617 and M=2,394) Final sample of remitters: 4,011 (F=1,617 and M=2,394) Dependent variables same before: ependiture shares Dependent variables same before: ependiture shares Due to the principal-agent problem, we introduce two new variables that measure the remitter’s degree of enforcement: Due to the principal-agent problem, we introduce two new variables that measure the remitter’s degree of enforcement: 1) Relationship to household head (closer → better enforcement) (closer → better enforcement) 2) Location of remitter (closer to receiving household → better enforcement)

RESULTS 1. Do female headship and receiving remittances matter? FHHs on average have larger expenditure shares allocated to food (10%) and education (40%), but smaller budget shares allocated to consumer goods (-15%), housing (-8%) and other goods (-8%) FHHs on average have larger expenditure shares allocated to food (10%) and education (40%), but smaller budget shares allocated to consumer goods (-15%), housing (-8%) and other goods (-8%) Quasi difference-in-difference coefficient is significant for four of six expenditure categories for FHHs receiving remittances from abroad: food (-14%), consumer goods (+12%), housing (+11%), other (+12%) Quasi difference-in-difference coefficient is significant for four of six expenditure categories for FHHs receiving remittances from abroad: food (-14%), consumer goods (+12%), housing (+11%), other (+12%) Striking result: interaction of receiving international remittances AND being female-headed just about offsets the impact of female headship—i.e., preferences of remitters seem quite important. Striking result: interaction of receiving international remittances AND being female-headed just about offsets the impact of female headship—i.e., preferences of remitters seem quite important. Quasi difference-in-difference estimator for internal remittances is significant only for consumer goods (-6%) Quasi difference-in-difference estimator for internal remittances is significant only for consumer goods (-6%)

RESULTS Predicted budget shares by sex of the household head, origin of remittances and type of expenditure (percentage of total budget) Type of households Food Consumer and durable goods HousingHealthEducationOther Male-headed households not receiving remittances Male-headed households receiving remittances from Ghana Male-headed households receiving remittances from abroad Female-headed households not receiving remittances Female-headed households receiving remittances from Ghana Female-headed households receiving remittances from abroad Source: Authors' calculations. Note: Percentages do not sum to 100 because of rounding.

RESULTS 2. Does the sex of the remitter matter? Unless we account for ability to enforce contracts, sex of remitter does not matter. Unless we account for ability to enforce contracts, sex of remitter does not matter. Households receiving remittances from female remitters in Ghana have higher percentages of expenditures on food and lower percentages on consumer and durable goods Households receiving remittances from female remitters in Ghana have higher percentages of expenditures on food and lower percentages on consumer and durable goods For female remitters as a whole, expenditure share on food is 17% lower; this difference accounted for by female remitters outside Ghana For female remitters as a whole, expenditure share on food is 17% lower; this difference accounted for by female remitters outside Ghana Relationship to household head seems to matter for some types of expenditure (food and health) Relationship to household head seems to matter for some types of expenditure (food and health)

RESULTS

CONCLUSIONS FHHs as a whole spend more on food, education, and less on consumer goods and housing FHHs as a whole spend more on food, education, and less on consumer goods and housing FHHs receiving remittances from abroad, however, tend to behave a lot like MHHs: spend more on consumer and durable goods and housing and less on food. Why? Are male remitters more successful in imposing their preferences? FHHs receiving remittances from abroad, however, tend to behave a lot like MHHs: spend more on consumer and durable goods and housing and less on food. Why? Are male remitters more successful in imposing their preferences? In the analysis using remitters as the unit of analysis, the sex of the remitter does not have an impact if one does not control for the capacity of the remitter to follow-up on the intended use of the remittances In the analysis using remitters as the unit of analysis, the sex of the remitter does not have an impact if one does not control for the capacity of the remitter to follow-up on the intended use of the remittances Once that is controlled for, households’ with female remitters seem to have a higher budget share devoted to food, but lower expenditures on consumer durables and housing. Once that is controlled for, households’ with female remitters seem to have a higher budget share devoted to food, but lower expenditures on consumer durables and housing.

POLICY ISSUES Is there a case for: Mechanisms to increase the bargaining power of women in migrant households, since increased bargaining power may be associated with greater anti-poverty expenditures (principally food and education)? Mechanisms to increase the bargaining power of women in migrant households, since increased bargaining power may be associated with greater anti-poverty expenditures (principally food and education)? Remittance-facilitating products which target women (both female remitters and female remittance receivers)? Remittance-facilitating products which target women (both female remitters and female remittance receivers)?

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