Remittances and the Household's Expenditures On Health

Summary

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This paper considers the effect of remittances on the share of health expenditures in total household expenditure in Mexico. The main purpose of this paper is to investigate if remittances are especially targeted towards household's health expenditure in Mexico. Using IV Tobit and regression models we find a statistically significant effect of remittances on the household health expenditures shares. This effect is even more pronounced for households without access to the employment's medical insurance.

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Extract

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Remittances and the Household's Expenditures On Health

(ProQuest-CSA LLC: ... denotes formulae omitted.)

Introduction

This paper analyzes the impact of remittance transfers on health expenditure of Mexican households. Using data from the National Income Expenditure Survey of Households of Mexico (ENIGH) for the year 2004, this paper examines if remittances are intended to spend on healthcare for the migrant-sending families in Mexico. The basic idea is to test the fungibility hypothesis that posits that a dollar is a dollar and the household will expend it on the good with the highest marginal utility, irrespective of its origin. This will be done by making a distinction between the marginal impact of an increase in income and that of targeted remittances and by presenting their respective estimates. The results are expected to have potential public policy implications for remittances. Note that health expenditure is an attractive area to study the impact of remittances. According to the data generated by the Mexican Migration Project for the period 2005-2007, while 43.3 percent of people covered in the study reported that the most important motive for sending remittances is food and sustenance, other 35.8 percent considered health expenditure to be the most important reason. Amuedo-Dorantes et al. (2007) report that 46 percent of the people remitting money consider household's health expenditures (HHE) to be the most important motive for sending remittances.

According to the World Health Organization (2007a), national expendi...

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