Working paper abstract

#2014-072

Do remittances and social assistance have different impacts on expenditure patterns of recipient households? The Moldovan case

Jennifer Waidler, Jessica Sabine Hagen-Zanker, Franziska Gassmann & Melissa Siegel

Do remittances and social assistance have different impacts on household expenditure patterns? While two separate strands of literature have looked at how social assistance or remittances have been spent, few studies have compared them directly. Using data from a nationally representative household survey conducted in Moldova in 2011, this paper assesses the impact both types of transfers have on household expenditure patterns. Contrary to the common assumption that money is fungible, we find that social assistance and remittances have different impacts on expenditure patterns (having controlled for potential endogeneity). This research highlights that income source matters and that different incomes may have different poverty impacts. In our sample, the two types of transfers are received by different, but to some extent overlapping population groups. The fact that the two transfers are spent in different ways means that, to some extent, social assistance and remittances are complements rather than substitutes.

Key words: remittances, social assistance, expenditure patterns, Moldova

JEL Classification: F22, F24, J18, I32, I38, E21, H50