The Influence of Remittances on Mutual Transactions in an Isolated Village
Downloads
In this paper, we investigate the influence of domestic remittances on mutual transactions through the trade of major products among households in an isolated village in a developing country. We use trade data of individual household obtaining from our own Household Survey 2015 and 2016 conducted in northern Lao PDR. By using propensity score matching method, the paper estimates the average treatment effect on the treated, and it finds that remittances have an increasingly significant impact on mutual transactions mainly through increasing in rice, non-timber forest products, and livestock trading among households with remittances. Moreover, this paper also finds that remittances had a more significant contribution to increased stock of goods rather than consumption in households with remittances. Suggesting that households with remittances, which are both consumers and traders, tend to accumulate their resources for future transactions, this is due to external market distance, food insecurity and network constraints.
Keywords: Remittance, Developing Country, External Market Distance,
Food Insecurity, Network Constraint
JEL Classification: F17, F24, E23
Acosta, P., Calderón, C., Fajnzylber, P., & Lopez, H. (2008). What is the Impact of International Remittances on Poverty and Inequality in Latin America? World Development, 36(1). https://doi.org/10.1016/j.worlddev.2007.02.016
Adams, R. H., & Cuecuecha, A. (2010). Remittances, household expenditure and investment in guatemala. World Development, 38(11). https://doi.org/10.1016/j.worlddev.2010.03.003
Adams, R. H., & Cuecuecha, A. (2013). The Impact of Remittances on Investment and Poverty in Ghana. World Development, 50. https://doi.org/10.1016/j.worlddev.2013.04.009
Aggarwal, R., Demirgüç-Kunt, A., & Pería, M. S. M. (2011). Do remittances promote financial development? Journal of Development Economics, 96(2). https://doi.org/10.1016/j.jdeveco.2010.10.005
Ambrosius, C., & Cuecuecha, A. (2016). Remittances and the Use of Formal and Informal Financial Services. World Development, 77. https://doi.org/10.1016/j.worlddev.2015.08.010
Amuedo-Dorantes, C., & Pozo, S. (2011). New evidence on the role of remittances on healthcare expenditures by Mexican households. Review of Economics of the Household, 9(1). https://doi.org/10.1007/s11150-009-9080-7
Bertoli, S., & Marchetta, F. (2014). Migration, Remittances and Poverty in Ecuador. Journal of Development Studies, 50(8). https://doi.org/10.1080/00220388.2014.919382
Bui, T. T. N., Le, T. T. N., & Daly, K. J. (2015). Microlevel impacts of remittances on household behavior: Viet Nam case study. Emerging Markets Review, 25. https://doi.org/10.1016/j.ememar.2015.10.001
Caliendo, M., & Kopeinig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1). https://doi.org/10.1111/j.1467-6419.2007.00527.x
Coulibaly, D. (2015). Remittances and financial development in Sub-Saharan African countries: A system approach. Economic Modelling, 45, 249-258.
Clément, M. (2011). Remittances and household expenditure patterns in Tajikistan: A propensity score matching analysis. Asian Development Review, 28(2). https://doi.org/10.2139/ssrn.2001145
Combes, J. L., & Ebeke, C. (2011). Remittances and Household Consumption Instability in Developing Countries. World Development, 39(7). https://doi.org/10.1016/j.worlddev.2010.10.006
Démurger, S., & Wang, X. (2016). Remittances and expenditure patterns of the left behinds in rural China. China Economic Review, 37. https://doi.org/10.1016/j.chieco.2015.12.002
Heckman, J. J., Ichimura, H., Smith, J. A., & Todd, P. E. (1998). Characterizing selection bias using experimental data.
Jimenez-Soto, E. V., & Brown, R. P. C. (2012). Assessing the Poverty Impacts of Migrants' Remittances Using Propensity Score Matching: The Case of Tonga. Economic Record, 88(282). https://doi.org/10.1111/j.1475-4932.2012.00824.x
Lee, W. S. (2013). Propensity score matching and variations on the balancing test. Empirical Economics, 44(1). https://doi.org/10.1007/s00181-011-0481-0
López-Feldman, A., & Chávez, E. (2017). Remittances and Natural Resource Extraction: Evidence from Mexico. Ecological Economics, 132. https://doi.org/10.1016/j.ecolecon.2016.10.010
Meyer, D., & Shera, A. (2017). The impact of remittances on economic growth: An econometric model. EconomiA, 18(2). https://doi.org/10.1016/j.econ.2016.06.001
Nguyen, D. L., Grote, U., & Nguyen, T. T. (2017). Migration and rural household expenditures: A case study from Vietnam. Economic Analysis and Policy, 56. https://doi.org/10.1016/j.eap.2017.09.001
Piras, S., Vittuari, M., Möllers, J., & Herzfeld, T. (2018). Remittance inflow and smallholder farming practices. The case of Moldova. Land Use Policy, 70. https://doi.org/10.1016/j.landusepol.2017.10.050
Rosenbaum, P. R., & Rubin, D. B. (1983). The central role of the propensity score in observational studies for causal effects. Biometrika, 70(1). https://doi.org/10.1093/biomet/70.1.41
Taylor, J. E., & Mora, J. (2006). Does Migration Reshape Expenditures in Rural Households: Evidence from Mexico. World Bank, 95616.
Vacaflores, D. E. (2018). Are remittances helping lower poverty and inequality levels in Latin America? Quarterly Review of Economics and Finance, 68. https://doi.org/10.1016/j.qref.2017.09.001
Copyright (c) 2019 SOULIXAY HONGSAKHONE
This work is licensed under a Creative Commons Attribution 4.0 International License.
JDE (Journal of Developing Economies) (p-ISSN: 2541-1012; e-ISSN: 2528-2018) is licensed under a Creative Commons Attribution 4.0 International License
- The journal allows the author to hold the copyright of the article without restrictions.
- The journal allows the author(s) to retain publishing rights without restrictions
- The legal formal aspect of journal publication accessibility refers to Creative Commons Attribution (CC BY)
