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Citation Information

Type Working Paper - Institute of Statistical, Social and Economic Research (ISSER) Technical Publication
Title Migrant Remittances and Household Welfare in Times of Macro-Volatility: The Case of Ghana
Author(s)
Issue 69
Publication (Day/Month/Year) 2006
URL http://www.researchgate.net/profile/Peter_Quartey/publication/229048025_Migrant_Remittances_and_Hous​ehold_Welfare_in_Times_of_Macro-Volatility_The_Case_of_Ghana/links/54535aa10cf2bccc49098771.pdf
Abstract
Migrant worker remittances have been a means of survival for many Ghanaians, particularly in times of macroeconomic shocks. The growing volume and importance of migrant worker remittances in Ghana is evidenced by the recent proliferation of money transfer institutions in Ghana (both formal and informal). It has been argued that migrant remittances are becoming a source of external finance of a magnitude that exceeds the amount of ODA received in some developing countries. In Ghana’s case, available data from the Bank of Ghana show that the amount of remittances does indeed exceed ODA. It is general knowledge in Ghana that families with migrant workers; particularly those in developed countries, are able to withstand shocks to income and threats to household welfare. However, this relationship has not been tested empirically in Ghana despite the fact that the Ghana Living Standards Survey (GLSS) is rich with such micro-data on the economy. This study therefore pooled Waves III and IV of the GLSS into a pseudo-panel and investigated whether migrant remittances have been a source of income smoothing in Ghana, particularly in times of macro-volatility. The major findings include the following: First, migrant remittances are counter-cyclical in Ghana; inflows of remittances increase in times of economic shocks. Second, remittances significantly affect household welfare and therefore tend to reduce any economic shock that affects household income and consequently welfare. This is particularly true in the case of food crop farmers in Ghana who are ‘the poorest of the poor’. The study found that remittances are used (in addition to other coping mechanisms) to minimize the impact of economic shocks and are the main coping mechanisms for these groups of households in times of economic shock. Moreover, households that own land have better welfare than those without land. Whereas the level of education of the household head positively affects welfare, the age of the head of the household negatively correlates with household welfare, although this was not significant. The study also found that larger households have reduced welfare, an indication that there is an absence of consumption synergies within larger households. Finally, the proportion of males receiving migrant remittances exceeds that of females. This finding is not encouraging since it has been established that transfers to female-headed households have more significant and positive welfare effects than transfers to their male counterparts.

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