Exploring Multi-Dimensional Wellbeing and Remittances in El Salvador

Abstract

El Salvador has experienced high and increasing migration outflows during the last three decades, fuelled by the civil war in the 1980s and currently by a lack of economic opportunities. In parallel, family remittances have grown to represent 16.1 percent of GDP in 2004. In this context, it is relevant to explore the wellbeing of individuals in households receiving remittances. In this paper, we propose an alternative measure of multi-dimensional wellbeing based on the capability approach that focuses on functionings or achievements of individuals in valuable dimensions of life, such as ���life and physical health�۝ and ���social relations�۝. From the multipurpose household survey (EHPM), we select feasible indicators for these dimensions which we aggregated using the Fuzzy Sets theory. We analyse wellbeing of different population groups in the selected dimensions of life. We find interesting differences in wellbeing between urban and rural households and male and female headed households. Finally, we analyse wellbeing for individuals in households depending on migration and remittances status. Households that receive remittances do show higher wellbeing, and those that are non-poor and receive remittances perform better than all other groups. The difference is higher in the dimensions of ���security, shelter and environment�۝ and in social relations�۝. This is the first application of Fuzzy Sets theory to measure multi-dimensional wellbeing in El Salvador, based on the EHPM. We recommend the inclusion of additional indicators in the questionnaire and a further exploration of this method to assess wellbeing of different population groups in order to support a more precise definition of social protection policies. Keywords: wellbeing, capabilities and functionings, migration, remittances, fuzzy sets JEL codes: F22, I31, I32, R20