Abstract
The Coronavirus Disease 2019 (COVID-19) is inevitably affecting remittance-dependent countries through economic downturns in the destination countries, and restrictions on travel and sending remittances to their home country. We explore the potential impacts of the COVID-19 pandemic on the welfare of remittance-dependent households using a dataset collected in the Philippines prior to the outbreak. First, we confirm that remittances are associated with welfare of households, particularly for those whose head is male or lower educated. Then, we use the revision of the 2020 GDP projections before and after the COVID-19 crisis to gauge potential impacts on households caused by the pandemic. We find that remittance inflow will decrease by 14–20% and household spending per capita will decline by 1–2% (food expenditure per capita by 2–3%) in one year as a result of the pandemic.
Highlights
The Coronavirus disease 19 (COVID-19) is a devastating pandemic with global effects and is undoubtedly one of the largest macro-level shocks to the world economy, as evidenced by the already ominous economic indicators
We find that remittance inflow will decrease by 14–20% and household spending per capita will decline by 1–2% in one year as a result of the pandemic
This paper explores the potential impacts of the COVID-19 pandemic on the welfare of households in a remittance-dependent country, which is likely to be severely exposed to external shocks
Summary
The Coronavirus disease 19 (COVID-19) is a devastating pandemic with global effects and is undoubtedly one of the largest macro-level shocks to the world economy, as evidenced by the already ominous economic indicators. Economics of Disasters and Climate Change (2021) 5:97–110 at the macro-level, the impact of the pandemic is likely to be heterogenous across countries and individuals. This paper explores the potential impacts of the COVID-19 pandemic on the welfare of households in a remittance-dependent country, which is likely to be severely exposed to external shocks. In 2019, 80% of the world’s total remittances flowed to low-and-middle-income countries (World Bank, 2020c); the negative impacts of the COVID-19 outbreak may be more serious in developing countries whose citizens heavily depend on remittances from migrant family members
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