I have already made at least 3 versions of my paper on remittance uses in the Philippines. And yet, I still find the methodology inadequate and quite implausible. Well, it isn’t that easy dealing with the methodological issues. There’s endogeneity of remittances, zero expenditures, and non-normality of the data. Being a remittance receiving household may be predetermined. Factors that affect this may be the same factors that affect how they use remittances. Ordinary regression analysis indeed becomes unreliable. And then if you look at the family expenditures, a lot of families do not have expenses recorded on say tobacco and alcohol or education or medical care. These are either due to corner solution or infrequency of purchase or maybe survey errors. Also in analyzing each distinct expenditure item or group, addressing the non-normality of the budget data becomes irritatingly important. But what I’ve learned so far is that you really cannot solve all the problems in one blow especially with a dataset that is limited and is not intended for this purpose. You have to tackle one issue at a time.
However, I must admit that even with improved datasets of the Family Income and Expenditure Survey (e.g. presence of longitudinal data), the Labor Force Survey, and the Survey on Overseas Filipinos, it is still not easy to explain this diaspora. We need more information on the remittances senders, what their jobs are, how much they earn, what their employment statuses are. Getting a clear picture of the characteristics of remittance senders and their families are very important in understanding the spending behavior of remittance receiving households.
Orbeta (2008) provided a comprehensive review of the studies on remittance and migration and their effects to households in the Philippines stressing important notes on the methodologies employed. The conclusion is that the results are highly dependent on the methodology used and thus caution has to be exercised in interpreting them.
Below is a list of studies on remittance uses and related subjects.
Orbeta, A. C. Jr. “Economic Impact of International Migration and Remittances on Philippine Households: What We Thought We Knew, What We Need to Know” (December 2008). Philippine Institute for Development Studies Discussion Paper No. 2008-32. Available at PIDS: http://dirp4.pids.gov.ph/ris/dps/pidsdps0832.pdf
Adams, Jr., Richard H., “Remittances, Household Expenditure and Investment in Guatemala” (March 2005). World Bank Policy Research Working Paper No. 3532. Available at SSRN: http://ssrn.com/abstract=695362
Brown, S. (2006). Can Remittance Spur Development? A Critical Survey [Electronic version]. International Studies Review 8, 55-75.
Burgess, R. & Haksar, V. (2005, June). Migration and Foreign Remittances in the Philippines (IMF Working Paper No. 05/111).
Castaldo, A. and Reilly B. (2007). Do Migrant Remittances Affect the Consumption Patterns of Albanian Households? South-Eastern Europe Journal of Economics1, 25-54. Available: http://www.asecu.gr/Seetje/issue08/castaldo.pdf
Lucas, R. and Stark, O. (1985). Motivations to Remit: Evidence from Botswana. Journal of Political Economy 93 (5), 901-918.
Mora, J. & Taylor, J. E. (2006, February). Does Migration Reshape Expenditures in Rural Households? Evidence from Mexico (World Bank Policy Research Working Paper No. 3842). http://ssrn.com/abstract=922968
Pernia, E. (2006). Diaspora, Remittances and Poverty RP’s Regions (University of the Philippines School of Economics Discussion Paper 2006/02). Quezon City: UP School of Economics. http://www.econ.upd.edu.ph/respub/dp/pdf/DP2006-02.pdf
Portes, A. (1995). Economic Sociology and the Sociology of Immigration: A Conceptual Overview. In A. Portes (Ed.) The Economic Sociology of Immigration (pp.1-41). New York: Russel Sage Foundation.
Rodriguez, E. (1996, April). International Migrants’ Remittances in the Philippines. Canadian Journal of Economics 29 (S2), S427-S432.
Sosa, L. C., & Medina, C. (2006). Migration as a Safety Net and Effects of Remittances on Household Consumption: The Case of Colombia. (Borradores de Economia No. 002712). Colombia: Banco de la Republica. http://www.banrep.gov.co/docum/ftp/borra414.pdf
Tan, E. (2006). Overseas Filipinos Remittance (University of the Philippines School of Economics Discussion Paper 2006/03). Quezon City: UP School of Economics. http://www.econ.upd.edu.ph/respub/dp/pdf/DP2006-03.pdf
Taylor, J.E., Arango, J., Hugo, G., Kouaouci, A., Massey, D., & Pellegrino, A (1996, Autumn). International Migration and Community Development. Population Index 62 (3), 397-418.
Yang, D. (2005, February). International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks (World Bank Policy Research Working Paper Series No. 3578). http://ssrn.com/abstract=546483