A Micro-level Analysis of the Effect of Remittances on Health Expenditures: Evidence from Albania

Abstract

Using household survey data for Albania, the paper investigates the effect of remittances on health capital accumulation. Total expenditure is divided into two categories: expenditure on medicines and expenditure on visits and laboratory services. The estimation is presented for two separate sub groups, rural and urban area. In the paper both instrumental variable and propensity score matching are used to give answer to the research question about the impact of remittances in the health capital investment.The findings indicate that households increase their expenditure for medicines and other health services in the presence of remittance income. The positive relationship is statistically significant in the case of remittance receiving households living in the rural area. The magnitude is lower in the case of total expenditure for visits and laboratory. However, total expenditure for visits and laboratory are likely to have significant impact on the health outcome given their prevention nature. These findings show that remittance flows pay a heterogeneous role in the decision making process of remittancereceiving household members. However, these non-labor income flows may play an important role in supporting expenditures, especially for those living in rural areas.

International Migration and Health in the Countries of Origin. The Effect on Households with Migrants and/or Recipients of Remittances, and on Returned Migrants. A Systematic Review

“…This problem was more common in the studies that analyzed the effect of remittances on health expenditure or some health-related outcomes. The strategies most used to avoid biased estimations were the instrumental variables (12,27,28,29,30,31,32,33,34), estimation through the methods Propensity Score Matching and the models of difference in differences (35,36), as well as the use of estimators of fixed effects, in the case of the models with panel data (37,38,39).…”

“…There is as well an asociation between receiving remittances and the decrease of fertility rates (27,34,74) and child mortality (7,12,34,49). Regarding the general health condition, receiving remittances decreases the probability of suffering from a chronic or sudden disease (36) and improves health outcomes, including the children's (7,8,75).…”

“…In reference to health expenditure, receiving remittances increases medication expenditure (29,76), hospitalization (29), medical visits and laboratoy services (36), preventive health activities (33) and, in general, the total health expenditure of households (8,28,33,35,70,72,77,78,79,80,81).…”

Impact of remittances on healthcare utilisation and expenditure in developing countries: a systematic review

“…Table 3 shows the review of the effects of remittances on health expenditure in Albania, an analysis of the impact of remittances on health expenditures showed that households receiving remittances increased their health expenditures on drugs and other health-related services such as medical visits and laboratory services. [6] The impact was significant for households in rural areas because the total expenditures on drugs increased by approximately $86.27. The findings of the study reveal that remittances have a positive impact on the expenditure for medical visits and laboratory services.…”

“…The findings of the study reveal that remittances have a positive impact on the expenditure for medical visits and laboratory services. [6] In Mexico, data from a nationally representative survey carried out by the Mexican statistical institute showed that remittances increased health expenditures for both low-income households and rich households. [18] High-income households receiving $5.25 increment in remittance increased expenditures on health by $0.37.…”