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Overseas Filipino's Remittance Behavior

There has been much interest on migrants’ remittances and their impact on the migrants’ economy and families. Over the last few years, the Asian Development Bank together with the World Bank sponsored studies and conferences on the levels, channels, transactions cost and economic impact of remittances in the Asia Pacific region. The studies and fora have inevitably included the Philippines since it is one of the largest outmigration countries and has been receiving one of the largest amounts of remittance in the region. In the last decade, remittances to the Philippines averaged about 20% of its export earnings and contributed more than 7% to GNP. Remittances have come from an estimated 4.5 million overseas Filipino workers or OFWs and more than 3.4 million permanent emigrants who have settled mainly in the United States (2005). Most of the OFWs are employed on short-term contracts though renewable in many cases. The great majority of OFWs are young breadwinners who have to leave their immediate families behind because of immigration and residential restrictions and the high cost of living in the host countries. Only about 20% of OFWs are single with many having financial responsibility for their parents and siblings. The OFWs are the largest source of remittances for they have obligations to support their families. The permanent emigrants tend to have a weaker incentive to remit to relatives for they are usually able to bring their families with them immediately or within a reasonable time in the future. Nevertheless many permanent emigrants are observed to maintain familial and social links to their homeland and send monetary and other gifts to relatives and friends left behind. The paper looks at the remittance behavior of these two groups of migrants, the OFWs and the permanent emigrants. It applies received theory on remittance behavior on cross-section data from the 2004 special survey on remittances sponsored by the Asian Development Bank.


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Jul 10, 2013