This thesis examines the economic effects of both international and domestic remittances on Filipino households. The thesis investigates three main research questions: (1) “Which household characteristics affect the probability and the size of domestic and international remittances migrant households received?”; (2) “How do these two sources of remittances Filipino households received affect welfare inequality at the household level?”; (3) “How do the remittances affect the recipient household’s expenditure patterns, especially educational expenditures?” The data mainly used for
the thesis come from the nationally representative Family Income and Expenditure Survey (FIES) in the Philippines during the period of 1985-2006. With regard to the first question, the thesis finds that the levels of receiving international and domestic remittances are mutually related and reveals that there is a displacement effect of remittances from abroad on those from within the country. Furthermore, the thesis also revealed that several explanatory factors such as the welfare level, the heads’ characteristics, the job-related factors, and the regional disparities are significant to determine both the probability and the size of receiving the remittances. Regarding the second question, the thesis shows that the receipt of international remittances could significantly contribute to an improvement in Filipino households’ livelihoods at any welfare level and that it would cause expenditure inequality between Filipino households to widen over time. In contrast, the receipt of remittances from within the Philippines did not exert a significant impact on improving the welfare. As for the last question, the thesis finds that the receipt of remittances from abroad
would increase the budget share for education as well as its absolute value. This result supports the idea that international remittances could contribute to the future Philippine economic growth via increase in human capital investment if the country sort out the issues on brain drain of educated migrants’ children.