Remittances, social security, and the crowding-out effect: Evidence from Vietnam

Hai Anh La, Ying Xu

    Research output: Contribution to journalArticle

    Abstract

    In the absence of adequate social security systems, many people in developing countries, especially the poor and vulnerable, cope through migration-related remittances. However, when remittances, internal or international, provide social benefits similar to public transfers they may overlap: ‘crowding-out’ effects occur. Employing three long-sample Vietnam Household Living Standard surveys undertaken during the 2000s, this paper studies the crowding-out effects of remittances in Vietnam, a developing country that has experienced a soaring inflow of remittances since 2000. Significant crowding-out effects for both domestic and international remittances on income are found below the poverty line in Vietnam, consistent with an altruistic motive. Beyond this, transfer derivatives are positive and statistically significant in both areas, suggesting a switch of motives from altruism to exchange at the poverty line. The substituting relationship between public transfers and remittances observed for the rural poor reveals key challenges to delivering an equal and efficient social security system in the country.
    Original languageEnglish
    Pages (from-to)42-59
    Number of pages18
    JournalJournal of Asian Economics
    Volume49
    DOIs
    Publication statusPublished - 1 Apr 2017

    Fingerprint

    Crowding-out effect
    Social security
    Remittances
    Developing countries
    Public transfers
    Poverty line
    Social security system
    Social benefits
    Income
    Standard of living
    Altruism
    Derivatives
    Household

    Cite this

    @article{6f766844d7644e91815abdc16bef32fa,
    title = "Remittances, social security, and the crowding-out effect: Evidence from Vietnam",
    abstract = "In the absence of adequate social security systems, many people in developing countries, especially the poor and vulnerable, cope through migration-related remittances. However, when remittances, internal or international, provide social benefits similar to public transfers they may overlap: ‘crowding-out’ effects occur. Employing three long-sample Vietnam Household Living Standard surveys undertaken during the 2000s, this paper studies the crowding-out effects of remittances in Vietnam, a developing country that has experienced a soaring inflow of remittances since 2000. Significant crowding-out effects for both domestic and international remittances on income are found below the poverty line in Vietnam, consistent with an altruistic motive. Beyond this, transfer derivatives are positive and statistically significant in both areas, suggesting a switch of motives from altruism to exchange at the poverty line. The substituting relationship between public transfers and remittances observed for the rural poor reveals key challenges to delivering an equal and efficient social security system in the country.",
    keywords = "Altruistic motive, Crowding out effect, Domestic remittances, Exchange motive, International remittances, Vietnam",
    author = "La, {Hai Anh} and Ying Xu",
    year = "2017",
    month = "4",
    day = "1",
    doi = "10.1016/j.asieco.2017.02.002",
    language = "English",
    volume = "49",
    pages = "42--59",
    journal = "Journal of Asian Economics",
    issn = "1049-0078",
    publisher = "Elsevier",

    }

    Remittances, social security, and the crowding-out effect: Evidence from Vietnam. / La, Hai Anh; Xu, Ying.

    In: Journal of Asian Economics, Vol. 49, 01.04.2017, p. 42-59.

    Research output: Contribution to journalArticle

    TY - JOUR

    T1 - Remittances, social security, and the crowding-out effect: Evidence from Vietnam

    AU - La, Hai Anh

    AU - Xu, Ying

    PY - 2017/4/1

    Y1 - 2017/4/1

    N2 - In the absence of adequate social security systems, many people in developing countries, especially the poor and vulnerable, cope through migration-related remittances. However, when remittances, internal or international, provide social benefits similar to public transfers they may overlap: ‘crowding-out’ effects occur. Employing three long-sample Vietnam Household Living Standard surveys undertaken during the 2000s, this paper studies the crowding-out effects of remittances in Vietnam, a developing country that has experienced a soaring inflow of remittances since 2000. Significant crowding-out effects for both domestic and international remittances on income are found below the poverty line in Vietnam, consistent with an altruistic motive. Beyond this, transfer derivatives are positive and statistically significant in both areas, suggesting a switch of motives from altruism to exchange at the poverty line. The substituting relationship between public transfers and remittances observed for the rural poor reveals key challenges to delivering an equal and efficient social security system in the country.

    AB - In the absence of adequate social security systems, many people in developing countries, especially the poor and vulnerable, cope through migration-related remittances. However, when remittances, internal or international, provide social benefits similar to public transfers they may overlap: ‘crowding-out’ effects occur. Employing three long-sample Vietnam Household Living Standard surveys undertaken during the 2000s, this paper studies the crowding-out effects of remittances in Vietnam, a developing country that has experienced a soaring inflow of remittances since 2000. Significant crowding-out effects for both domestic and international remittances on income are found below the poverty line in Vietnam, consistent with an altruistic motive. Beyond this, transfer derivatives are positive and statistically significant in both areas, suggesting a switch of motives from altruism to exchange at the poverty line. The substituting relationship between public transfers and remittances observed for the rural poor reveals key challenges to delivering an equal and efficient social security system in the country.

    KW - Altruistic motive

    KW - Crowding out effect

    KW - Domestic remittances

    KW - Exchange motive

    KW - International remittances

    KW - Vietnam

    U2 - 10.1016/j.asieco.2017.02.002

    DO - 10.1016/j.asieco.2017.02.002

    M3 - Article

    VL - 49

    SP - 42

    EP - 59

    JO - Journal of Asian Economics

    JF - Journal of Asian Economics

    SN - 1049-0078

    ER -