Do Remittances Lead to a Public Moral Hazard in Developing Countries? An Empirical Investigation

Christian Hubert Ebeke ()

Journal of Development Studies, 2011, vol. 48, issue 8, 1009-1025

Abstract: This article tests the hypothesis that in a context of ‘bad governance’, remittance inflows strongly reduce public spending on education and health in receiving countries; a phenomenon called the ‘public moral hazard problem’. Using a large sample of 86 developing countries over the period 1996--2007, and after factoring in the endogeneity of remittances, the results suggest a negative impact of remittances on public spending on education and health, when governance is bad in remittance-dependent economies.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jdevst:v:48:y:2012:i:8:p:1009-1025

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DOI: 10.1080/00220388.2011.615918

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