Abstract
Sharing information concerning expenditure choices between a migrant and the recipient affects the migrant’s allocation patterns. In a lab-in-the-field experiment, Filipino migrants are asked to earmark an in-kind budget to be delivered to their most closely connected household (MCCH). When the MCCH is fully aware of the migrant’s decisions (i.e., symmetric information), we observe that the migrant raises the portion for consumption goods in the range of 10.0–10.5% with respect to the case when the migrant’s choices are not disclosed (i.e., asymmetric information). Moreover, when sharing information, the migrant relies on more involvement of the recipient household and lowers by 7–9% the allocation to expenses she could monitor ex-post more strictly. The former result is consistent with the signaling motive, whereas the latter supports the presence of strategic behavior by the migrant remitter. Education allocations are significantly higher in intra- rather than inter-household transfers and this provides insights for conditional cash transfer policies.
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Notes
See Beblo and Beninger (2017) for recent evidence on in-couple income pooling.
We use the term “investment-type” to refer to all choices that imply future consumption and/or an increase in household wealth, also in terms of human capital—as for the case of education. An alternative appropriate term would be “household saving-type”.
See Section 2.1 for the definition of monitored verifiable goods.
Intercepts were scheduled at various times on a variety of days of the week. The intercept points were five fixed locations: the Santa Pudenziana Filipino community church, the Bank of the Philippine Islands Rome branch, the Embassy of the Philippines, the headquarters of an important Filipino NGO (OFSPES), and the central train station in Rome (Termini Station).
The statement was the following: “We will also be offering you a new product related to education and remittances at the end of the survey, and you may benefit from using this product.” More details on EduPay can be found in De Arcangelis et al. (2015).
The lottery was actually implemented on 28 March 2013.
Enumerators were instructed to inform the interviewee of the type of information sharing with the MCHH at the beginning of the survey, and a special ID code was assigned for each treatment. The survey instrument is available upon request and shows that the migrant is reminded of the types of information sharing again at the beginning of the experiment in the second part.
Migrants were told that they would not be allowed to change their allocation decision if they later learned that they had won the lottery, so they should take the allocation decision seriously.
Residual items as Other expenses are included into the consumption group and Saving for other in the investment group as business item. As Table (2) shows, the quantity of funds for Other expenses is negligible, but we decided to include them to equal 1000 euros for the budget assigned. When taking them out of the analysis, nothing changes. Results are available upon request.
See footnote 20 in Appendix A.
Other aggregates have been used in the empirical analysis without significant changes. Additional material is available from the authors upon request.
Italia Lavoro, 2013. “The Philippine Community in Italy”, Annual Report on the Presence of Immigrants. Ministero del Lavoro e delle Politiche Sociali, Government of Italy.
When referring to the literature on remittance modeling, the migrant’s strategic behavior can be interpreted as either self-insuring or altruistic by pleasing the MCCH when observed. These latter two motives are observationally equivalent in our analysis, and a competing test between them is not possible in this set up.
We verify the randomization where the variables included into the three treatments are not statistically different. See Table (9) in the Appendix B.
The sum is not 1000 as we allow the migrant to suggest personalized items.
Regression results on the various subcategories are reported in Appendix C.
For the single aggregate items, the effect of Scenario 2 will be positive but characterized by standard errors so large that the statistics is not significant. We interpret this result as evidence of reshuffling across grouped items. Other results on the single items are available upon request.
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Acknowledgements
We want to thank Dean Yang and David McKenzie for their suggestions on the paper and all the participants of the 8th International Conference on “Economics of Global Interactions”, Bari 2017 and ICID–SITES–IFAD Conference on International Development Rome 2018. The comments and suggestions of the editor and of one anonymous referee have substantially improved the paper.
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Appendices
Appendix A. Part of the survey instrument
*The game explanation:
Please tell us how would you like your MCCH to receive the €1000. We are not going to give the money in cash, but in the way you tell us. It could be anything that you want us to give to them (not what you think your family would want). What you tell us will not affect the probability of wining for your family, since the winner will be selected randomly.
Tell us what you really want us to give to your MCCH. Think well, and tell us all what you really want, since if you win, that is exactly what we are going to give them. It could be any type of expense or type of savings/investments. If this choice is selected to be implemented, a project staff member will accompany each beneficiary to purchase the item or pay for the expense specified.
It could be several things, but the total amount must add up to €1000.
The important thing is that this is what you want for your MCCH.
Items | Euro |
1. Food | □ 1 ________ |
2. Clothes | □ 2 ________ |
3. Rent payment | □ 3 ________ |
4. Down payment on a house/land | □ 4 ________ |
5. Current mortgage on a house/land | □ 5 ________ |
6. Construction of a house (including repairs) | □ 6 |
7. Medical expenditure and medicines | □ 7 ________ |
8. Education expenses (tuition, books, etc). | □ 8 ________ |
9. Utilities payment (electricity, water, etc.) | □ 9 ________ |
10. Phone (house, cell phone, calling cards) | □ 10 ________ |
11. Agricultural inputs | □ 11 ________ |
12. Business expenses | □ 12 ________ |
13. Savings20: (must state purpose) | |
13a. To buy a house | □ 13a _______ |
13b. To buy land | □ 13b _______ |
13c. To buy a vehicle | □ 13c _______ |
13d. Marriage expenses | □ 13d |
13e. Others, specify: _________ | □ 13e _______ |
14. Long-term investments (e.g., time deposit for 1 year+, mutual funds, stocks/shares). | □ 14 ________ |
15. Large goods for the household (durables) | □ 15 ________ |
16. Car or other vehicle | □ 16________ |
17. Emigration expenditures | □ 17 ________ |
18. Insurance (life, health, etc.) | □ 18 _________ |
19. Marriage expenses | □ 19 ________ |
20. Others, specify:________________________ | □ 20 ________ |
What is the name of the head of your MCCH? _____________________ What is your relationship to this person? *[Before marking the answer, repeat:] : Name of the head of his/her MCCH is his/her:
1. Spouse
2. Son
3. Daughter
4. Parents
5. Grandparent
6. Grandchildren
7. Sister, Brother
8. First Cousin
9. Aunt, Uncle
10. In-law
11. Other (Specify): ____________________________
Appendix B. Balance tests
See in the Table 9.
Appendix C. Additional regression analysis on subcategories
Table 10 shows the same regression analysis when the dependent variables are the various groups of consumption goods. We start with the budget destined to basic consumption, and then, we include durables and services (see Table 1 for the composition of the subgroups). As the readjustments occur across different consumption groups, the analysis on the larger inclusive sets allows for more precise estimations of the effect of the two information scenarios.Footnote 17
The first significant effect is observed for basic consumption: when there is information sharing with the MCCH the budget for basic consumption increases by 50 euros or approximately 25% with respect to the case of private information (see column (1)). When adding durables (columns (3) and (4)), the effect increases to 113 euros or an increase of approximately 30%. Finally, when adding services (columns (5) and (6)), the results replicate the first two columns of Table 6 hence reverting to a slightly lower value. The stronger effect of durables is partly expected because it is a type of consumption good that resembles the most an investment good and that the migrant can also use when she returns.
Table 11 reports the results for the budget allocations for investment. Starting from residential investment and adding successively financial investment and business investment the effect of information sharing is negative, but very imprecise. It becomes statistically significant only when including the (large) education portion of the budget. This result was anticipated in Table 6, and it is confirmed for all of the other sets of budget items related to investment.
When adding various controls (i.e., being of female gender, the head of the MCCH is his/her spouse, having children in the Philippines, migrant’s income in Italy, education level, place-of-the-interview fixed effects), the results are robust. The variable detecting the degree of integration in Italy, as the level of household income in Italy, is statistically significant and leans against the general effects, i.e., it has negative effects on consumption items and a positive and significant effect on investment. Instead, for the migrants with just primary education, there is a tendency to favor consumption over investment, meaning that the education level of the migrant plays an important role in the composition of the remittance bundle.
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De Arcangelis, G., Joxhe, M. Intra-household allocation with shared expenditure choices: experimental evidence from Filipino migrants. Rev Econ Household 19, 1245–1274 (2021). https://doi.org/10.1007/s11150-020-09485-z
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DOI: https://doi.org/10.1007/s11150-020-09485-z
Keywords
- In-kind giving
- Signaling motive
- Strategic behavior
- Remittance motives
- Remitting for education
- Dictator game
- Philippines