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Analysis of Overseas Filipino Workers' Remittance Impact on National Transfer Accounts in the Philippines

Explore the influence of remittances from overseas Filipino workers (OFWs) on age profiles of labor income, household resources, and lifecycle deficits. Detailed analysis of OFW remittances compared to local workers' earnings. Presentation of findings on age distributions, overall impact, and estimation challenges.

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Analysis of Overseas Filipino Workers' Remittance Impact on National Transfer Accounts in the Philippines

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  1. Foreign Sector and the National Transfer Accounts (NTA): The Case of the PhilippinesResearchers/Institution:Rachel H. Racelis and John Michael Ian S. SalasPhilippine Institute for Development Studies Fourth Annual National Transfer Account Workshop2007 January 19-20, Berkeley, California

  2. Foreign Sector and NTA: • Need to explore the significance and possible implications of overseas Filipino workers (OFWs) remittance in NTA analysis This presentation: • Shows preliminary results of analysis of age profiles of “OFWs” remittance and domestic workers’ earnings using 1999 data

  3. Context of Philippine Labor Export: • The Philippine government promoted the export of labor in the 1970s • Short-term solution to unemployment and balance-of-payments problems • Unemployment situation in the Philippines not changed substantiallyover the last 30 years

  4. number of “overseas Filipino workers” or OFWs • rose substantially

  5. OFW remittance as a share of source of labor • income is rising

  6. Question #1 and Findings: • How does the age profile of OFW and their remittance compare with those for local workers and their earnings? • The age distribution of OFW and local wage earners are similar. • Per worker remittance increases with age while per worker earnings of the self-employed by age has the inverted U-shape.

  7. Question #2 and Findings: • Have OFW remittances significantly influenced or reshaped the age profile of total labor income? • The general flatness of the distribution of total OFW remittance by age has not significantly altered the overall distribution of total local labor income by age. • But the upward shifts in local labor income due to the addition of OFW remittance differed slightly among age groups, with highest at 15% for 25-34

  8. Question #3 and Findings: • Has the addition of OFW remittance to household resources significantly influenced the overall pattern of lifecycle deficits or surpluses by age? • size of OFW remittance relative to the aggregate surplus varies widely across age groups, about 70 percent in the 25-29 age group and only 10 percent in the 55-64 age group • but it does not significantly alter the overall distribution of surpluses by age

  9. OFW-related estimation issues encountered: • OFWs are not included in survey household roster • Remittance from abroad is reported as a source of household revenue • OFW remittance reported in survey is net of OFW consumption if OFW consumption is to be included in household consumption – how to estimate and what to use for aggregate control if OFW is incorporated as a household member - what to use as sampling weights

  10. Thank you.

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