Spending Patterns of Filipinos of OFWs:
A Review of Related Literature
Cid L. Terosa, PhD
Senior Economist and Associate Professor
School of Economics
University of Asia and the Pacific
Aurora G. Hidalgo
Senior Researcher
Social Economics Unit
School of Economics
University of Asia and the Pacific
Jovi C. Dacanay
Senior Economist and Faculty Member
School of Economics
University of Asia and the Pacific
Remittances are direct contributions of Overseas Filipinos to the economy. They stem directly from labor migration. As one of the largest labor exporters since the 1970s, the Philippines sends hundreds of thousands of workers to various destinations yearly. Historically, remittances have been rising at remarkable rates. From 2001 to 2011, remittances have grown by 234% or an annual average growth rate of about 12%. Based on the National Accounts of the Philippines from 2008 to 2010, the share of remittances in nominal gross domestic product (GDP) is 13.9% in 2008, 17.6% 2009, and 17.1% in 2010. As share of constant GDP, remittances account for 14.8% of real or constant GDP in 2008, 18.6% in 2009, and 18.1% in 2010.
The objective of this study is to review related literature on the spending patterns of families of OFWs. It aims to gather and review studies on the spending behavior of remittance-recipient households of OFWs. Ultimately, this study aims to establish an empirical foundation for an updated and detailed study of the spending patterns of families of different types of OFWs.
Empirical studies show that OFW households earn, save, and invest more than households without OFW relatives. Based on empirical studies reviewed in this paper, it appears that remittances increase household budget allocation for education, medical care, housing and repair, consumer goods, leisure, gifts, fuel, transportation, communication, household operations, and durable goods. Remittances, however, don’t seem to raise household budget allocation for food eaten outside of the home, tobacco, and alcohol.
Based on surveys, it appears that at least 95% of OFW families allocate more remittances to food, rent, and education. Although surveys show different figures, it appears that at least 60% of OFW families save and at least 85% of these families save in banks. Survey results seem to indicate that more than half of OFW families use remittances to pay medical bills while less than half of OFW families use remittances to pay back loans. OFW households spend more on house and lot, consumer durables, and motor vehicles when economic conditions are good. Conversely, OFW households spend less on the same goods when economic conditions are bad.
Empirical studies imply the need to identify the characteristics or attributes of migrant workers and their families because they have implications on the treatment and use of remittances. Hence, future studies and surveys should identify and analyze the demographic, socioeconomic, psychographic characteristics of OFWs by occupation and geographic origin. Also, empirical studies should determine the demographic, socioeconomic, and psychographic characteristics of OFW families according to the occupation of their OFW relatives and geographic origin.
Profile:
Jovi C. Dacanay graduated BS Statistics, MS Industrial Economics and MA Economics and is currently pursuing her PhD Economics. She lectures in Statistics, Social Economics and Research and Thesis Seminar in the School of Economics of the University of Asia and the Pacific. Her research includes industrial organization of health care markets, microfinance, social economics and the economics of film
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