The impact of remittances on household consumption: evidence from Morocco

Abstract

Remittances play a very important role in a country's economic growth and development, while at the same time having a substantial impact on improving household well-being at the microeconomic level. This paper uses propensity score matching as an econometric model to assess the impact of remittances on household consumption. The main source of the analysis is the National Survey on Household Consumption and Expenditure (ENCDM) conducted by the High Commission for Planning (HCP) during the period 2013-2014. This method consists of associating each household that has received remittances from a Moroccan Resident Abroad (MRA) with a household with similar demographic, socio-economic and geographical characteristics but which, for its part, has not received remittances.

The results show that there is a significate and positive relationship between remittances and consumption. As an additional income, remittances increase household consumption expenditure which indicates that higher the level of remittances, higher would be the consumption. As a consequence, these remittances decrease household poverty levels.

Keywords: Consumption, Migration, Morocco, Poverty, Propensity score matching, Remittances.

JEL Classification : F24

Paper type: Empirical Research