Date of Award
Doctor of Philosophy (PhD)
Dr. Sally Wallace
Dr. Shiferaw Gurmu
Dr. Andrew Feltenstein
Dr. Dillon Alleyne
Remittances significantly affect recipient households’ behavior. Using data from the Jamaican Survey of Living Conditions and the Jamaican Labor Force Survey ( 2001-2007), this dissertation explores the effects of remittances on labor market participation and household expenditures. Jamaica’s proximity to the United States and its diaspora of educated individuals shapes an economy largely dependent on remittances, thus providing an interesting case study.
First, we investigate whether remittances alter labor market behavior of married women in remittance-receiving households located in Jamaica. Remittances, the wife’s education, and wages are all treated as endogenous when estimating labor market participation and hours worked. Unlike other studies, we find that after instrumenting for remittances, the outside income has no significant effect on the supply of labor.
Second, we assess the extent that remittances alter the consumption pattern of recipient households in Jamaica. Classical theory predicts that total income affects household consumption decisions, but developments in behavioral economics suggest otherwise. The disaggregation of income streams and consumption expenditures provide us with unique insight into household behavior and in particular, spending on items such as food, schooling, and vices. Using Engel curve estimation and the two-part fractional response models, we find that the source of income significantly affects the shares of income spent in specific consumption categories. Recipients, for example, generally spend more of their income on schooling and home production and less at the grocery store. These findings suggest important implications should government look to tax or restrict the flow of remittances.
Stephenson, Andrew V., "The Effects of Outside Income on Household Behavior: The Case of Remittances in Jamaica" (2011). Economics Dissertations. Paper 79.