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Do Internal and International Remittances Affect Households' Expenditure and Asset Accumulation Differently? Evidence From Bangladesh

ABSTRACT:At the household level, remittances are considered to affect consumption and asset accumulation patterns and thus contribute to household welfare. This paper attempts to examine whether expenditure and asset accumulation across the remittance recipient households in Bangladesh vary according to internal and international remittance incomes. The paper employs the propensity score matching technique to estimate the average treatment effect on the treated as a measure of the impact of remittances on expenditure and asset accumulation for the households that have migrant family members. For doing so, it uses data from the Household Income and Expenditure Survey 2010. In addition, this study carries out Rosenbaum bounds sensitivity analysis to test the sensitivity of results. The results suggest that the effects of remittances on household spending pattern vary widely between households with internal migrants and those with international migrants. In case of international remittances, the results demonstrate significant positive increase in education expenditure and other expenditure category (e.g., fuel and transportation), and rise in land and property purchase. Households with international migrants also spend significantly lower percentage of incomes on food expenditure. In case of internal remittances, either the effects are insignificant compared to that of international remittances or the results from internal remittance recipient households are extremely sensitive to claim to be different than that from the households with no migrants. The overall effects of remittance on household expenditure and asset accumulation thus appear little in the country, although international remittance incomes tend to contribute to household welfare notably compared to internal remittance incomes. Such finding raises potential alarm before the policymakers and reveals the importance of actions at the appropriate level to ensure better utilization of remittance incomes, especially in the areas of domestic economic environment and institutions.