Migrant Remittances and Expenditure Patterns of Rural Households in Ethiopia: Evidence from Ethiopian Rural Households Survey

Abstract

This paper assesses the impact o/receipt o/remittances On expenditure pat/ems 0/
rural households in Ethiopia. Specifically, the paper investigates the extent to
which receipts o/remittances affect the consumption and investment behaviours 0/
rural households in Ethiopia. Using Ethiopian Rural Household Survey (ERHS)
data, two-part model is estimated within Engle's Curve Framework. The result
indicates that there is no strong link between receipt o/remittances and productive
investment expenditures. Remittances, however, have positive and significant
impact on consumption expenditures. This implies that migration and remittances
are used as a short term coping strategies and are hardly used as stepping-stone to
productive investment options. This calls for strategies to attract remittance
incomes to productive sectors with high potential to increase employment and
production on sustainable basis.