Do remittances lead to a public moral hazard in developing countries? An empirical investigation

Christian Hubert Ebeke (1)

1 CERDI - Centre d'Études et de Recherches sur le Développement International

This paper 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.

Mots clés: Social Sciences & Humanities

Domaines: Sciences de l'Homme et Société; Economies et finances

Christian Hubert Ebeke. Do remittances lead to a public moral hazard in developing countries? An empirical investigation. The Journal of Development Studies, 2012, 48 (8), pp.1. ⟨10.1080/00220388.2011.615918⟩. ⟨hal-00807100⟩