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The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia

This paper analyzes the impact of international remittances on poverty and household consumption and investment using panel data (2000 and 2007) from the Indonesian Family Life Survey. Three key findings emerge. First, using an instrumental variabl...

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Bibliographic Details
Main Authors: Adams, Richard H., Jr., Cuecuecha, Alfredo
Language:English
Published: 2012
Subjects:
AGRICULTURAL PRODUCTION
AMOUNT OF REMITTANCES
BANK POLICY
CAPITA EXPENDITURE
CAPITAL INVESTMENTS
COUNTERFACTUAL
CULTURAL CHANGE
DEVELOPING COUNTRIES
DEVELOPING COUNTRY
DEVELOPMENT ECONOMICS
DUMMY VARIABLE
DUMMY VARIABLES
DURABLE
DURABLE GOODS
DURABLES
ECONOMETRIC TECHNIQUES
ECONOMIC DEVELOPMENT
EFFECT OF REMITTANCES
EFFECTS OF REMITTANCES
EXCHANGE RATE
EXPENDITURE
EXPENDITURE DISTRIBUTION
EXPENDITURES
FEMALE-HEADED HOUSEHOLDS
FINANCIAL ASSETS
FIRST STAGE MODEL
FOOD GOODS
FOOD ITEMS
FUNGIBLE
GLOBALIZATION
HOLDINGS
HOUSEHOLD BUDGET
HOUSEHOLD COMPOSITION
HOUSEHOLD CONSUMPTION
HOUSEHOLD HEAD
HOUSEHOLD HEADS
HOUSEHOLD INCOMES
HOUSEHOLD LEVEL
HOUSEHOLD NUMBER
HOUSEHOLD SURVEY
HOUSEHOLD SURVEY DATA
HOUSEHOLD SURVEYS
HOUSEHOLD WELFARE
HUMAN CAPITAL
IMMIGRANT
IMPACT OF REMITTANCES
INCOME
INCOME DATA
INCOME INEQUALITY
INCOME REDISTRIBUTION
INCOME TRANSFERS
INSTRUMENT
INSURANCE
INTERNATIONAL BANK
INTERNATIONAL MIGRATION
INTERNATIONAL REMITTANCES
LABOR FORCE
LABOR MARKET
LEVEL OF POVERTY
MICRO-ENTERPRISES
MIGRANT
MIGRANT NETWORKS
MIGRANT REMITTANCES
MIGRANT WORKERS
MIGRATION
MIGRATION PATTERNS
MONETARY FUND
NATIONAL POVERTY
NATIONAL POVERTY LINE
NUMBER OF CHILDREN
NUMBER OF HOUSEHOLDS
NUMBER OF INTERNATIONAL MIGRANTS
NUTRITION
PARAMETER ESTIMATES
PERMANENT INCOME HYPOTHESIS
POLICY RESEARCH
POLICY RESEARCH WORKING PAPER
POOR
POOR PEOPLE
POOR PERSON
POVERTY GAP
POVERTY INDEX
POVERTY LINE
POVERTY MEASURE
POVERTY MEASURES
POVERTY REDUCTION
PRIMARY EDUCATION
PROGRESS
REMITTANCE
REMITTANCE FLOWS
REMITTANCE RECEIVING
REMITTANCE RECEIVING HOUSEHOLDS
REMITTANCE-RECEIVING HOUSEHOLDS
REMITTANCES
RESPECT
RURAL
RURAL AREAS
RURAL ASSET
RURAL HOUSEHOLDS
SAVINGS
SECONDARY EDUCATION
SEX
SOCIAL NETWORKS
SPOUSE
SQUARED POVERTY GAP INDEX
STANDARD ERRORS
UNIVERSITY EDUCATION
URBAN AREAS
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100927093138
http://hdl.handle.net/10986/3916
Description
Summary:This paper analyzes the impact of international remittances on poverty and household consumption and investment using panel data (2000 and 2007) from the Indonesian Family Life Survey. Three key findings emerge. First, using an instrumental variables approach to control for selection and endogeneity, it finds that international remittances have a large statistical effect on reducing poverty in Indonesia. Second, households receiving remittances in 2007 spent more at the margin on one key consumption good -- food -- compared with what they would have spent on this good without the receipt of remittances. Third, households receiving remittances in 2007 spent less at the margin on one important investment good -- housing -- compared with what they would have spent on this good without the receipt of remittances. Households receiving international remittances in Indonesia are poorer than other types of households, and thus they tend to spend their remittances at the margin on consumption rather than investment goods.

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