The Impact of remittances and community capacity building on household expenditure behavior and human capital investment

evidence from Cambodia

LEE, Chan Ju

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As the amount of remittances has been increasing, a perspective that remittances can be an important source of development engine especially in developing countries has emerged. Along with the money inflows, human capital investment is very critical for the sustainable economic development in the long term and it is closely related to the household expenditure behavior. Thus, it is very essential that policy makers should design and implement policies, which induce households to increase human capital investment related expenditure, in various perspectives.

This paper analyzes the impact of remittances on household expenditure behavior by comparing the expenditure behavior differences between households with remittances and without remittances. While most of studies end up with figuring out impact of remittances, this study contributes to the existing study by expanding the scope of research to include supply-side factors, which also can be influential in human capital investment, such as accessibility to services for education and health and existence of education/ health project supported by government or NGOs.

The empirical result finds that the households with remittances are more likely to invest their extra income on human capital investment, especially on health, while reducing their expenditure on other categories. However, expenditure behavior changes are not observed in the expenditure on health between two household groups. In addition, the capacity building, which is the capability of a community to provide education/ health services, is very critical to induce household expenditure on human capital investment. In the case of education, the effect of remittances disappears when other additional community capacity related variables are added. In addition, in a case of health, remittances have great impact on human capital investment by households, combining with other community capacity related variables. This result shows the efforts on improving the community capacity, such as removing physical barriers, financial barriers, service quality, knowledge of users, and sociocultural barriers in order to improve accessibility to the service, should be added along with securing sufficient household income.

Shin, Jaeun
KDI School, Master of Public Policy
Issue Date
KDI School
Thesis(Master) --KDI School:Master of Public Policy,2015
Human capital--Cambodia.
ix, 57 p.
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