The Effects of International Remittances on Expenditure Patterns of the Left-Behind Households in Sub-Saharan Africa

Ajefu, Joseph and Ogebe, Joseph O. (2021) The Effects of International Remittances on Expenditure Patterns of the Left-Behind Households in Sub-Saharan Africa. Review of Development Economics, 25 (1). pp. 405-429. ISSN 1363-6669

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Abstract

This article explores the effects of international remittances on the expenditure patterns of households in Sub-Saharan Africa. This article focuses on five countries in Sub-Saharan Africa, which are some of the destinations that account for the highest receipt of international remittances. We analyse both aggregate and distributional effects of international remittances on household’s expenditure patterns. To investigate the distributional effect of international remittances, we adopt the instrumental variable quantile regression framework that allows us to simultaneously address the endogeneity of international remittances and possible heterogeneity in the impact of international remittances on household’s expenditure patterns. We instrument for international remittances by using the economic conditions in migrants’ countries as instrument for international remittances. Our results show that the receipt of international remittances increases expenditures on food, durables, education and health. Using the instrumental variable quantile regression, we find the effects of international remittances on household expenditure on food, durables, education, and health increases across the different expenditure quantiles.

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