International Migration, Human Capital, and Entrepreneurship : Evidence from Philippine Migrants' Exchange Rate Shocks
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World Bank, Washington, DC
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Millions of households in developing countries receive financial support from family members working overseas. How do the economic prospects of overseas migrants affect origin-household investments-in particular, in child human capital and household enterprises? Yang examines Philippine households' responses to overseas members' economic shocks. Overseas Filipinos work in dozens of foreign countries which experienced sudden (and heterogeneous) changes in exchange rates due to the 1997 Asian financial crisis. Appreciation of a migrant's currency against the Philippine peso leads to increases in household remittances received from overseas. The estimated elasticity of Philippine peso remittances with respect to the Philippine/foreign exchange rate is 0.60. In addition, these positive income shocks lead to enhanced human capital accumulation and entrepreneurship in origin households. Favorable migrant shocks lead to greater child schooling, reduced child labor, and increased educational expenditure in origin households. More favorable exchange rate shocks also raise hours worked in self-employment and lead to greater entry into relatively capital-intensive enterprises by migrants' origin households.
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AGRICULTURE, CAPITA INCOME, CHILD SCHOOLING, CLUSTERS, COMPENSATION OF EMPLOYEES, CREDIT CONSTRAINTS, DEVALUATION, DURABLE GOOD, ECONOMIC GROWTH, ECONOMIC MODELS, ELASTICITY, EXCHANGE RATE, EXCHANGE RATE CHANGES, EXCHANGE RATES, FAMILY INCOME, FINANCIAL CRISIS, FOREIGN CURRENCY, FOREIGN CURRENCY EARNINGS, GEOGRAPHIC DISPERSION, HOUSEHOLD CHARACTERISTICS, HOUSEHOLD HEAD, HOUSEHOLD INCOME, HOUSEHOLD MEMBER, HOUSEHOLD MEMBERS, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HUMAN CAPITAL, IMPORTANCE OF REMITTANCES, INCOME, INCOME LEVELS, INCOME SHOCK, INCOME SOURCES, INCOMES, INCREASE IN REMITTANCES, INTERNATIONAL MIGRATION, LIFETIME INCOME, LIQUIDITY, MIGRANT SAVINGS, MIGRANTS, MILLION PEOPLE, NORMAL GOOD, OVERSEAS MIGRANTS, PER CAPITA INCOME, PERMANENT INCOME, PESOS, PHILIPPINE PESOS, POSITIVE INCOME, PRODUCTIVE ASSETS, PUBLIC POLICY, REAL GDP, REGRESSION ANALYSIS, REMITTANCE, REMITTANCE RECEIPTS, REMITTANCES, REPRESENTATIVE SAMPLE, SMALL BUSINESS, SMALL BUSINESS OWNERSHIP, STANDARD ERRORS, SURVEY DATA, UNEMPLOYMENT, UNEMPLOYMENT RATE, WAGE RATES, WAGES, WEIGHTED AVERAGE