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Do remittances help smooth consumption during health shocks? Evidence from Jamaica

Diether Beuermann (), Inder Ruprah () and Ricardo Sierra

No 2014-12, Working Papers from Peruvian Economic Association

Abstract: Social networks provide an important means by which individuals and households share risk. One of the mechanisms by which informal risk sharing could be achieved is through remittances. Accordingly, this paper identifies whether and how remittances facilitate consumption smoothing during health shocks in Jamaica. In addition, we identify whether remittances are subject to moral hazard by receivers, how the informal insurance provided by remittances interacts with formal health insurance, and whether there are differential effects by gender of the household head. Overall, we find that remittances offer complete insurance towards decreased consumption during health shocks and that moral hazard is weak. The role of remittances as a social insurance mechanism, however, is only relevant in the absence of private health insurance. Public formal health insurance is found to perform a poor job as a safety net that is completely offset by the social insurance provided by remittances.

Keywords: Consumption Smoothing; Jamaica; Remittances; Health Shocks (search for similar items in EconPapers)
JEL-codes: F24 I13 O15 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-ger and nep-hea
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Journal Article: Do remittances help smooth consumption during health shocks?: Evidence from Jamaica (2016) Downloads
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