Impact of Remittances and Gender on Expenditure Pattern: An Insight into Intra-Household Resource allocation of Rural Sector Households in Sri Lanka

Abstract

Using a nationally representative data set, this study examines the impact of migrant remittances on expenditure pattern and intra-household decision making process of rural households in Sri Lanka. The impact was estimated using fractional logit models within the Engel curve framework. Estimating the fractional logit models, we find evidence that there are strong differences in the impact on expenditure patterns of male and female household heads with the receipt of internal remittances whereas effect of international remittances on changing the expenditure pattern and the intra-household resource allocation is negligible. More specifically male household heads allocate less on education and more on ad hoc purchases, entertainment and transport expenditure, while female household heads allocate more on food expenditure with the receipt of internal remittances. Moreover, remitters’ contribution for the ad hoc purchases, entertainment and transport expenditure increases with their presence as a migrant to the household head. Overall, the study concludes that remittances are not directed towards the productive investments or human capital formation with the receipt of remittances in male headed or female headed households of rural sector of Sri Lanka.