(DP 1991-07) Overseas Employment, Savings Rate and Income Distribution: The Philippine Case

Abstract

The first part of the paper gives a brief history of labor emigration; it also explains the Filipino's relatively high propensity to migrate by the country's colonial experience and the flexibility of its labor market. It then applies the life cycle consumption theory to families who receive income from abroad. Foreign employment is generally of short duration and results in a bulge in the overseas workers' income path. A higher saving rate from overseas income is expected. This hypothesis is tested using the 1988 Family Income and Expenditure Survey. It is further found that overseas employment has improved income distribution since the large majority of the migrant workers come from the lower income groups.