Essays on remittances in rural Malawi

Abstract

After discussing the Malawian context and summarising the remittance research, I focus on remittances in rural Malawi. I follow remittances from the giver’s motivations through to the receiver’s view of remittances and how the receiver uses them and finally to their impact as a means of moderating the effect of negative shocks on the receiving household. Results show that parents remit to respondents for altruistic purposes, or for insurance motivations (e.g. to help out the respondent if they are sick). Respondents remit to parents for altruistic motivations and inheritance. There is strong bi-directionality in the remittance flows. Children remit to respondents as an “insurance premium”, and for inheritance motivations. Altruism motivates respondents to give to their children. There is strong evidence of co-insurance between respondents and their siblings with both insurance payouts and premiums being paid. Respondents and their siblings also remit to each other for altruistic motivations. There is strong evidence of “mental accounting” amongst both male and female headed households. Remittances exhibit a much lower MPC than salary and farming income. Male and female headed households differ in their use of income from different sources, however one result is consistent: remittances are used for education. Probit models indicate that households are more likely to receive remittances from local areas if someone in the household is sick (local remittances insure a health shock). Households that suffer from drought are more likely to receive remittances from more distant areas (other districts, a city, abroad). Drought has a major negative impact on consumption levels but distant remittances insure affected households who suffer from these. Local remittances, which make up most remittance flows, are unable to insure these community shocks. Only around 10 per cent of households receive remittances from outside their home district however. Remittances help to insure household consumption against health shocks, but only food consumption is insured.

Date of Award	1 Sept 2008
Original language	English
Awarding Institution	University of Bath
Supervisor	Joshy Easaw (Supervisor) & Atanu Ghoshray (Supervisor)