Remittances and household spending strategies: evidence from the Life in Kyrgyzstan Study, 2011–2013

Abstract

Globalised labour migration and remittances can help alleviate household poverty and provide supplemental income in many countries. Kyrgyzstan, like other Central Asian countries, has experienced dramatic geopolitical changes, economic reform, and rapid demographic shifts in the post-Soviet-Union era. Based on measurements of GDP, it is one of the most remittancedependent countries in the world. This study uses data from the Life in Kyrgyzstan Study collected from 2011 to 2013 to break down household budgets into eight consumption categories as part of a detailed analysis of how varying remittance receipt is related to household spending. We address two methodological concerns: (1) the endogeneity of remittances and (2) population heterogeneity. In so doing, we find remittances have limited effects on household spendingwhile changes in remittances do yield small changes on the budget shares of food and medical expenses, no effects were found on other consumption shares. These results suggest that households in Kyrgyzstan may take remittances as permanent income and proportionally alter consumption shares along with changes in remittances. By focusing on a country whose GDP relies heavily on remittances, the findings increase our understanding of how remittances affect spending at the household level.

Measuring the Contribution of International Remittances to Household Expenditures and Economic Output: A Micro–Macro Analysis for the Philippines

“…This information allows us to allocate changes in aggregate consumption when we conduct simulations for remittance shock scenarios using the I-O model. We estimate the consumption equations closely following the empirical specification of Wang, Hagedorn, and Chi (2021), with some additional assumptions about how income from remittances is allocated and utilized in a remittance-receiving household:…”

“…The coefficient, 𝛽 , refers to the percentage point change in the share of expenditure item 𝑖 in total expenditure given a percentage change in total household income. Unlike Wang, Hagedorn, and Chi (2021), who distinguish between remittance and non-remittance income by obtaining a unique parameter of marginal propensity to consume for each income, we use household's 𝑇𝐼𝑛𝑐 or total income (in log) regardless of sources. In other words, we assume that remittance income is as fungible as all other sources of income, such as wages and salaries.…”

“…Table 1 presents our empirical results. Following the relevant literature, such as Zhu et al (2014) and Wang, Hagedorn, and Chi (2021), the coefficients, 𝛽 , of total household income can be interpreted as the marginal propensity to consume, which varies by receipt of remittances as well as the extent of dependency to such income source with the interaction term, 𝜌 . In terms of magnitude, bank savings or investments are observed to have the largest increase in any expenditure item amid a similar increase in total household income.…”

Migration and Forsaken Schooling in Kyrgyzstan, Tajikistan, and Uzbekistan

“…Ahunov et al (2015) did not find a significant income effect for remittances on educational spending in Uzbekistan. Wang et al (2019) also found that remittances have no effect on investment in education and housing;…”

The Kyrgyz in the Southern Urals: Between Local Groups and the Host Community

“…Это множественное планирование будущего «здесь» и «там», влияние денежных переводов на домохозяйства на родине, положение киргизских мигрантов в иерархии по сравнению с другими сообществами и др. (Джанызакова 2019;Reeves 2012;Gerber, Zavisca 2020;Wang et al 2021).…”