Social Protection Role of Remittances: The Cases of Fiji and Tonga

Eliana Jimenez Soto (2008). Social Protection Role of Remittances: The Cases of Fiji and Tonga PhD Thesis, School of Economics, The University of Queensland.

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Author Eliana Jimenez Soto
Thesis Title Social Protection Role of Remittances: The Cases of Fiji and Tonga
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2008-05
Thesis type PhD Thesis
Supervisor Brown, Richard
Leeves, Gareth D.
O'Donnell, Christopher
Subjects 340000 Economics
Formatted abstract
This thesis examines the extent to which migrants’ remittances provide social protection coverage to households in poor countries where formal social protection systems are lacking, with Fiji and Tonga as country studies. Under an extended version of the mixed-motives framework of remittances determinants, this research argues that when household resources are below some ‘subjective living norm’ altruistic concerns prevail and remittances are aimed at increasing the household’s welfare, in a similar fashion to other social protection instruments. Should household income increase sufficiently to provide for an adequate living standard, the migrant’s dominant motivation will switch from altruism to exchange. This hypothesis is formally tested using data from a cross-sectional sample of Fijian and Tongan households collected through household surveys conducted by the author. The empirical evidence provides support for the hypothesis that remittances are driven by both altruistic concerns and exchange motivations. In further support of the social protection role of remittances, it was also found that the marginal effects of household welfare on remittances are substantially stronger when altruistic rather than exchange concerns prevail. On the other hand, as expected the estimated parameters were also substantially larger in the more mature migration country, Tonga, where access to remittances has been more widespread and over a much longer period of time.
The same survey data are also used to formally test the second hypothesis posed by this research, viz. that remittances intended to perform a social protection role can be expected to contribute to poverty alleviation and improving, or at least not worsening, income distribution in recipient communities. This research uses two different counterfactual methodologies to estimate what the poverty and inequality indicators would be in a scenario ‘without migration and remittances’ which treats remittances as a substitute for migrants’ foregone earnings. This is the first study known to the author that tests the robustness of the findings of the hypothetical scenario without migration and without remittances to the choice of counterfactual methodology. This research found that remittances contribute to poverty alleviation but do not impact income distribution.
The empirical evidence of this research supports the hypothesis that remittances contribute to the provision of social protection coverage and poverty alleviation in remittance-receiving developing countries. Superior development outcomes could therefore be expected if their populations enjoy greater access to international labour markets.

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Created: Thu, 03 Jul 2008, 09:51:10 EST by Noela Stallard on behalf of Library - Information Access Service