The impact of gender on the intrahousehold allocations of remittances of Filipino migrant workers

Marjorie Pajaron, University of Hawaii at Manoa

In 2008, approximately two million Overseas Filipino Workers (OFWs) were abroad (about 2% of the total population); about 52% were male and 49% female (Survey on Overseas Filipinos, 2008). Most of the OFWs (20%) worked in Saudi Arabia; about 14% worked in Arab Emirates, Singapore, Hong Kong, Japan, Qatar, and Taiwan; 9% were in Europe; and 8% in North and South America. The remittances that these OFWs send to their origin households in the Philippines are an important source of income for the households and for the economy as a whole. On average, remittances are about 58% of the total household income of remittance-receiving households. They also totaled approximately 15 billion US dollars in 2008, which made these cash transfers the second largest source of foreign exchange in the Philippines, next to exports of goods and services (Central Bank of the Philippines, 2008). Given the importance of remittances, how these are spent and allocated by the households not only affects the welfare of households in the Philippines but also impacts the Philippine economy. This paper adds to the intrahousehold allocation literature by incorporating migration and remittances using datasets from the Philippines. The primary goal of this study is to examine whether the individual’s bargaining power within the household, ceteris paribus, affects how remittances are allocated or spent. I use gender of household head as a proxy for bargaining power and analyze whether male-headed households have different expenditure patterns than female-headed households. Using fractional logit, and after controlling for income effects, the results suggest that female heads of households allocate remittances more on food, and less on medical goods, alcohol and tobacco, and household operations than their male counterparts. The results on food and alcohol and tobacco expenditure shares are consistent with the general findings of empirical tests on income pooling.