Impact of foreign remittances on the household spending behaviour in Bangladesh

Abstract

ABSTRACT This paper analyses the impact of international remittances on household spending behaviour in the Bangladesh context. The total household spending has been classified into seven categories, namely education, health, food, consumed and durable goods, housing and land, investment and ‘other consumption’. For addressing the self-selection bias, we applied the propensity score matching technique. Moreover, to analyse the impact of remittances on the marginal spending behaviour we applied the Working-Leser (WL) model. Findings from the study reveal that remittances have positive and significant impact on the amount spent on almost all the spending categories except education, and investment. In terms of budgetary shares of different spending categories, households receiving remittances spend a lower fraction of their total spending on food and investment. Although the impact of remittances is positive and significant for the budget shares of health, housing and land, it is found to be insignificant for education and consumed and durables goods.