| Abstract: |
The author uses a large household data set from Guatemala to analyze how the
receipt of internal remittances (from Guatemala) and international remittances
(from the United States) affects the marginal spending behavior of households
on various consumption and investment goods. Contrary to other studies, the
author finds that households receiving remittances actually spend less at the
margin on consumption-food and consumer goods and durables-than do households
receiving no remittances. Instead of spending on consumption, households
receiving remittances tend to spend more on investment goods, like education,
health, and housing. The analysis shows that a large amount of remittance
money goes into education. At the margin, households receiving internal and
international remittances spend 45 and 58 percent more, respectively, on
education, than do households with no remittances. These increased
expenditures on education represent investment in human capital. Like other
studies, the author finds that remittance-receiving households spend more at
the margin on housing. These increased expenditures on housing represent a
type of investment for the migrant, as well as a means for boosting local
economic development by creating new income and employment opportunities for
skilled and unskilled workers. |