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.
