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Remittances, household expenditure and investment in Guatemala
 
Author:Adams, Richard H. Jr.; Collection Title:Policy, Research working paper ; no. WPS 3532
Country:Guatemala; Date Stored:2005/03/04
Document Date:2005/03/01Document Type:Policy Research Working Paper
SubTopics:VN-Acb Mis -- IFC-00535908; Housing & Human Habitats; Municipal Housing and Land; Economic Conditions and Volatility; Health Monitoring & EvaluationLanguage:English
Region:Latin America & CaribbeanReport Number:WPS3532
Volume No:1 of 1  

Summary: The author uses a large household data set from Guatemala to analyze how the receipt of internal remittances (from Guatemala) and international remittances (from the United States) affects the marginal spending behavior of households on various consumption and investment goods. Contrary to other studies, the author finds that households receiving remittances actually spend less at the margin on consumption-food and consumer goods and durables-than do households receiving no remittances. Instead of spending on consumption, households receiving remittances tend to spend more on investment goods, like education, health, and housing. The analysis shows that a large amount of remittance money goes into education. At the margin, households receiving internal and international remittances spend 45 and 58 percent more, respectively, on education, than do households with no remittances. These increased expenditures on education represent investment in human capital. Like other studies, the author finds that remittance-receiving households spend more at the margin on housing. These increased expenditures on housing represent a type of investment for the migrant, as well as a means for boosting local economic development by creating new income and employment opportunities for skilled and unskilled workers.

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