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Labor Migration, Remittances and Economic Well-being of Households in the Philippines

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Abstract

Labor Migration has long been viewed as a strategy adopted by the household unit to allocate family resources rationally to increase the flows of income and to raise family standard of living. The research reported here examines the extent to which remittances sent by Filipino overseas workers increase the income and standard of living of households in the Philippines. Data for the analysis were obtained from a representative sample of 2,388 households drawn in 1999–2000 from four major “labor sending” areas in the Philippines. The analysis compares households with and without overseas workers to estimate the contribution of remittances to household income and to household standard of living (measured once by an ‘objective’ indicator and once by a ‘subjective’ assessment). The data reveal that due to remittances the income of households with overseas labor migrants is considerably higher than the income of households without overseas workers. The data also reveal that remittances are used mostly for consumption purposes (e.g. purchase of food, clothing, education, and goods) and that most of the difference in standard of living (whether measured on the ‘objective’ or the ‘subjective’ scale) between households with and without overseas workers are attributed to remittances. The implications of labor migration and the policy that encourages and supports labor migration for the Filipino society are evaluated and discussed.

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Notes

  1. Survey data were collected from 2,388 households. In 72 households both husband and wife were employed abroad. Forty-two households had other members of the unit, such as aunts, uncles, or adult children, who were overseas workers. These two small groups were excluded from the analysis. For detailed description of the sampling procedure see “The study on the consequences of international migration of Filipino parents on their children”—NIRP final scientific report 2/6/2001.

  2. There might be other form of goods remitted to the households. In this study remittances are restricted only to cash flow.

  3. Standard of living is a weighted measure of the number of household goods that are in the possession of the household. The items included in the index are electricity, radio, TV, VCR, stereo, karaoke, computer, electric iron, electric fan, rice cooker, microwave, gas/electric range, fridge, washing machine, bike, motorcycle, tricycle, jeepney, car, kuliglig. That is, in scarcity index of living standard, each item was given a weight calculated as 1 − p, where p is proportion of households in the total population who possess the item (Semyonov and Lewin-Epstein 2000).

  4. Unfortunately no direct questions were asked on investment in the economy or businesses. Therefore, we have no data to present on domestic investment.

  5. To examine the impact of missing values (13.8% for earnings in the Philippines and 19.3% of reported overseas remittances) we estimated the equations once using pairwise deletion procedure and once using listwise delition procedure. The results are quite similar and lead to the same conclusions reported here.

  6. The equations that seem most appropriate for conducting this decomposition procedure are those that do not include remittances among the set of predictors. The exclusion of remittances from the analysis enables us to estimate the portion of the gap between the two types of household that is due to availability of remittances. The structural regression equations that were used for the decomposition are: Household Income = 6.732–0.002*age of husband + 0.021*age of wife +0.060*education of husband +0.015*education of wife + 0.092*size of household + 0.684*husband is professional or technician + 0.209*husband is clerk or sale + 0.367*husband is manual worker +0.476*wife is professional or technician + 0.416*wife is clerk or sale + 0.058*wife is manual worker. OBJSTL = − 1.278 + 0.012*age of husband + 0.026*age of wife +0.121*education of husband +0.125*education of wife-0.001*size of household + 0.412*husband is professional or technician + 0.174*husband is clerk or sale + 0.245*husband is manual worker +0.721* wife is professional or technician + 0.525* wife is clerk or sale-0.023* wife is manual worker-0.002* household earning in the Philippines (LN). SUBSTL = 4.76 + 0.009*age of husband + 0.002*age of wife +0.071*education of husband +0.036*education of wife + 0.040*size of household + 0.294*husband is professional or technician + 0.146*husband is clerk or sale + 0.21*husband is manual worker +0.225* wife is professional or technician + 0.077* wife is clerk or sale + 0.197* wife is manual worker-0.016* household earning in the Philippines (LN).

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Correspondence to Moshe Semyonov.

 

 

Appendix For what purpose remittances were spent by type of household (only for households with overseas labor migrant)

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Semyonov, M., Gorodzeisky, A. Labor Migration, Remittances and Economic Well-being of Households in the Philippines. Popul Res Policy Rev 27, 619–637 (2008). https://doi.org/10.1007/s11113-008-9084-7

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