Do Remittances Lead to a Public Moral Hazard in Developing Countries? An Empirical Investigation

摘要

This article tests the hypothesis that in a context of 'badgovernance', 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 irhe period 1996-2007, and after factoring in the endogeneity of remittances, the results suggest a negative impact of remittances on public spending on ed ucation and health, when governance is bad in remittance-dependent economies.