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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Main Authors:	Adams, Richard H., Jr., Cuecuecha, Alfredo
Format:	Policy Research Working Paper
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

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spelling	okr-10986-39162021-04-23T14:02:13Z The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia Adams, Richard H., Jr. Cuecuecha, Alfredo 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 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. 2012-03-19T18:42:06Z 2012-03-19T18:42:06Z 2010-09-01 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 English Policy Research working paper ; no. WPS 5433 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper East Asia and Pacific East Asia and Pacific Southeast Asia Asia Indonesia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	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
spellingShingle	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 Adams, Richard H., Jr. Cuecuecha, Alfredo The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia
geographic_facet	East Asia and Pacific East Asia and Pacific Southeast Asia Asia Indonesia
relation	Policy Research working paper ; no. WPS 5433
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Adams, Richard H., Jr. Cuecuecha, Alfredo
author_facet	Adams, Richard H., Jr. Cuecuecha, Alfredo
author_sort	Adams, Richard H., Jr.
title	The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia
title_short	The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia
title_full	The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia
title_fullStr	The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia
title_full_unstemmed	The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia
title_sort	economic impact of international remittances on poverty and household consumption and investment in indonesia
publishDate	2012
url	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
_version_	1764389005734969344

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

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