Distributional effect of international remittances on household expenditure: Evidence from Cameroon

AbstractIn this study, we examine the distributional effect of international remittances on household expenditures in Cameroon. We define non-poor (poor) and recipient households as those who have access to remittances and allocate a large (small) proportion of their budgets on health, education and/or food. Following this definition, our study uses the quantile regression method and migration observatory data from the Africa and Caribbean (2012) survey, to empirically examine the relation. Results show however that remittances negatively affect the three expenditure items, but only the relation between remittances and food expenditures show statistically significant outcomes. In respect to the quantile distribution method, we find a negative average effect of remittances on food expenditure. In addition, the effect of remittances on the expenditure of less poor household is positive at a large magnitude. This result hence suggests increased economic inequalities resulting from increased remittances. Our finding further confirm the hypothesis stipulating that: adverse distributional effect of remittances depend on household ability to finance the migration cost. We therefore agree with already existing conclusions in the economic literature.