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

Solomon M. Gofere, Ethiopian Economics Association

This paper assesses the impact of migrant remittances on expenditure patterns of rural households in Ethiopia. Specifically, the paper investigates the extents to which receipts of remittances affect the consumption and investment behaviors of rural households. Using ERHS data two-part model is estimated within Engle’s Curve framework. The result indicates that there is no strong link between receipt of remittances and productive investment expenditures. The result also indicates that remittances have positive and significant impact on consumption expenditures. This implies that migration and remittances are used as a short term coping strategies and hardly used as stepping-stone to productive investment options.