Remittance and Household Expenditure Behaviour in Ghana

Abstract

This thesis analyses the effect of remittance on household spending behaviour in Ghana. The propensity scores matching estimation technique, which makes it possible to reduce selection bias associated with the use of observational data, is employed to assess the average effect of remittances on several budget shares of households. Using data from the sixth round of the Ghana Living Standard Survey, the results generally give some indications of a productive use of remittances. Generally, remittance receiving households are associated with a decline in food expenditure. Also, households that receive any form of remittance are associated with increased spending on education and health compared to those that do not. Specifically, the result also indicates that households that receive internal remittance spend more on education and health. However, the receipt of external remittance does not support a productive use of remittance. Similarly, households that receive both internal and external remittance only does not support a productive use of remittances as they are spent more on other non-food items. With the likelihood of positively impacting human capital development, the study recommends the implementation of suitable policies that facilitates the transfer and receipt of remittances at a minimal cost. Also, government need to provide quality education and healthcare facilities so that households can maximize the returns from utilization. Keywords: Remittances, Household Expenditure, Propensity Score Matching, Sub Saharan Africa, Ghana