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Title: Essays on Household Economics and Remittances

Citation Type: Dissertation/Thesis

Publication Year: 2013

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Abstract: Understanding how families make economic decisions about how to allocate scarce household resources is crucial for the development and implementation of effective development policy. This dissertation investigates three specific questions related to this broad area of research. The first chapter demonstrates the importance of information asymmetries in transnational households, where physical distance between family members can make information barriers especially acute. I implement an experiment among 1,300 Salvadoran migrants in Washington, DC and their family members in El Salvador that examines how (1) changing the ability of participants to monitor each other and (2) revealing migrant preferences can affect the sending and spending of remittances. Migrants make an incentivized decision about how much of a cash windfall to keep and how much to send home, and recipients decide how to allocate the spending of a remittance. Migrants remit significantly more when their choice is observed by recipients, and this effect is concentrated among pairs where recipient ability to punish migrants is plausibly high. The results support a model of remittance sending where migrants react strategically to being monitored, but only when recipients can enforce remittance agreements. Recipients make spending choices closer to the migrants’ preferences when they are revealed, suggesting that recipients’ choices may be inadvertently affected by imperfect information on migrant preferences. Together, these results indicate that information imperfections in families are varied and can affect resource allocation in both strategic and inadvertent ways. In the second chapter, I examine how the exogenous change in individual income provided by eligibility for the South African government pension can affect decision making in the household. Exploiting the age discontinuity in pension eligibility, I find that eligible females are 13 to 16 percentage points more likely to be the primary decision makers for expenditures than non-eligible females--rare direct support for bargaining models of the household. There is no corresponding effect for eligible males. Due to labor force withdrawal, male income does not increase at the age of eligibility, providing an explanation for the lack of impacts of male eligibility on decision making. The increase in female decision-making power translates into improved nutritional outcomes for girls and higher levels of durable goods ownership. Because male income does not increase, these findings invite a reconsideration of the common assumption that women make more productive use of cash transfers than men. The third chapter, written jointly with Diego Aycinena and Dean Yang, returns to transnational households. We study the intersection of two research areas: educational subsidies and migrant remittances. We implement a randomized experiment offering Salvadoran migrants cash subsidies for education, which are channeled directly to a beneficiary student in El Salvador chosen by the migrant. The subsidies – in the form of matching grants – lead to increases in educational expenditures, higher private school attendance, and lower labor supply of youths in El Salvador households connected to migrant study participants. We find substantial “crowd in” of household educational investments, particularly for female students: for each $1 received by female beneficiary students, educational expenditures on that student increase by close to $5. There is no evidence of shifting of educational expenditures from other students in the household to the target student, and the subsidy has no substantial effect on remittances sent by the migrant.

Url: https://deepblue.lib.umich.edu/bitstream/handle/2027.42/99984/ambler_1.pdf?sequence=1&isAllowed=y

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Authors: Ambler, Catherine, M

Institution: University of Michigan

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Degree: Doctor of Philosophy (Economics)

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Pages: 174

Data Collections: IPUMS USA

Topics: Aging and Retirement, Housing and Segregation

Countries: United States