Seafarer Remittances and The Economy

INTRODUCTION
Seafarers remittances are an important component of our countrys economic

growth. In 2013, seafarers1 remitted a total of $5.22 Billion 2, which accounted for 18.51% of
total remittances, while seafarers only constitute 3.5% of total stock of Filipino migrant
workers. The volume of seafarer remittances is about the same as the regional gross
domestic products (GRDP) of Region 2 (Cagayan Valley), Region 5 (Bicol Region), Region 9
(Zamboanga Peninsula) and CAR, and twice those of Region 13 (Caraga) and ARMM.
Comparing with other components of the balance of payments, sea-based remittances are
three times foreign direct investments (FDIs) and seven times official development
assistance in 2010, and half of current account balance (net exports) in 2013.
Over the course of 10 years, from 2003- 2013, sea-based remittances have grown four
times, with a year-on-year average growth rate of 15.13%, a little bit higher from that of landbased remittances at 11.88%. Within the same time period, share of sea-based remittances
to GDP also rose: from only 1.55% in 2003 to 1.92% in 2013, withstanding the countrys
GDP growth from the past ten years. Figure 1 shows the smooth growth in seafarer
remittances from 2003- 2013. Figure 2 shows the upward trend in the deployment of seabased workers since 1984- 2013. Sea-borne trade has historically resisted fluctuations in
world real GDP (Fearnleys, 2008). With markets becoming more internationally integrated,
trade becoming even more essential, and the declining supply of seafarers in traditional
shipping economies, demand for seafarers3 is expected to rise further, along with the
deployment of Filipino seafarers, and therefore, Filipino sea-based remittances are unlikely
to fall.
While total seafarers share on remittances may seem small at single digit, calculating the
per capita remittance would magnify the economic value of a seafarer. In 2013, the average
per seafarer remittance reached $14,204.47, while the average per land-based worker
1 In this paper, the word seafarers refer to sea-based overseas Filipino workers. This does not include personnel from the
Philippine Navy, Philippine Marine Corps, or any local shipping company.
2 This value does not take in remittances from informal channels, such as pabaon, wherein a friend who visits the Philippines
would personally hand in the remittance to the remitters relative during a visit to the Philippines. Amante (2003) wrote that
pabaon system is common among seafarers to avoid the high transactions costs when sending via formal channels
3 Demand for officers and ratings are expected to increase by 32,103 and 46,881 respectively by 2020 (JITI, 2010).
remittance is only $2,113.194. From 2008- 2013, average remittance sent by a seafarer grew
by 22%. Figure 3 shows an upward trend in per-worker sea-based remittances from 20082013.
Remittances of Sea-based OFWs: 2003-2013

(in Billion US$)
Remittance from seafarers
3,034.6
1,298.0
1,464.9 1,669.4
1,949.3
3,400.4
3,806.1
4,340.4
4,835.3
5,215.4
2,236.4
2003.02004.02005.02006.02007.02008.02009.02010.02011.02012.02013.0
Figure 1: Remittances of Sea-based OFWs (2003-2013)

Source: Bangko Sentral ng Pilipinas
4 This is calculated by dividing total land-based remittances with stock of land-based OFWs, rather than deployed OFWs.
There is a list of problem with this calculation. First, not all land-based workers remit. It is common among OFWs to bring their
families to their host countries. Second, income distribution of land-based OFW remitters is not available. We do not know
whether there are many low-income OFWs remitting, or per-worker remittance is just really low. Third, the amount and
regularity of remittances sent also depends on the cost of living in the host country (Orozco, 2006; 2009). OFWs in countries
with low cost of living are subject to an income effect of increased savings.
Annual deployment of Filipino seafarers: 1984- 2013
# of Filipino seafarers deployed
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Year
F
Figure 1: Annual deployment of sea-based workers (1984- 2013)
Source: Philippine Overseas Employment Administration
Average annual remittances by a Filipino seafarer (in US$)

16000
14000
12000
10000
average annual remittances
by a seafarer
8000
6000
4000
2000
0
Figure 3: Average annual remittances sent by a Filipino seafarer

Sources: Authors calculations of data from Philippine Statistical Authority and Bangko Sentral ng Pilipinas
Average annual remittances by land-based workers (in US$)

2150
2100
2050
2000
1950
1900
2008.0
2009.0
2010.0
2011.0
2012.0
2013.0
Figure 4: Average annual remittances by a land-based OFW
Sources: Authors calculations of data from Philippine Statistical Authority and Bangko Sentral ng Pilipinas
That the average seafarer sends more than the average OFW is hardly surprising. First,
under the contract of Philippine Overseas Employment Association (POEA), seafarers must
remit at least 80% of their income back to the Philippines. This is reasonable considering
that seafarers do not have to spend anything on board. And, this constraint reduces the
more on average because (s)he has a relatively higher income due to compensating wage
differentials. The relatively higher wage is a means to attract individuals to enter seafaring.
And third, seafarers have a very high possibility of return to the home country. Studies have
proven that the higher the migrant workers possibility of return to the home country, the
higher is the remittance sent. Fourth, seafarers are subject to less economic fluctuations
compared to land-based workers, whose remittances also depend on the economic
conditions in the host country;
Studying the economic importance of seafarers go hand-in-hand with studying how
their remittances lead to economic development. A large body of literature has shown that
remittances lead to an improvement of household welfare, a rise in savings, an increase in
social assets and small and medium scale enterprises (SMSEs), financial development, and
a reduction in poverty. In the Philippines, remittances are shown to increase consumption
(Abdon, et al, 2006; Villlamil, 1998; Tabuga, 2007), savings (Aranda, et al, 2005; Pernia,
2008), and human capital outcomes, such as health (Tullao, et al, 2007; Pernia, 2008) and
education (Tullao, et al, 2007; Zosa & Orbeta, 2009; Pernia, 2008; Yang, 2007; Ang, et al,
2008). The Philippine remittance literature focused on how OFW households spend
remittance income. Villamil (1998) categorized remittance by the sex of remitters and found
that use of remittances vary depending on the sex of remitter. No other study has been
made to analyze recipient-household behavior by categorizing remitters by type of work.
It is not enough to look at the literature on remittances to infer the microeconomic
consequences of the more specific seafarers remittances. Seafarers are subject to the
required remittance ratio of at least 80%. It is hypothesized that having a large portion of
income taken away would incentivize the remitter to ensure that the remittances are used
productively, rather than squandered through conspicuous consumption. Furthermore,

Monthly income
Average annual
remittances
Length of contract
Rank
Average: $ 1,225
Senior officers: $ 2,086
Junior officers: $ 1,714
Able body (AB): $ 1,000
Ratings: $ 995
$980
9.7 months
analyzing
spending
behavior
of
recipients
of
sea-based
Age
Ratings: 72.2%
Junior officers: 19.1%
Senior officers: 8.7%
37 years old
Age at first time work
24 years old
Number of household
members
Marital status
Eight members
specific
73% are married
policies for a
Average number of
dependents
Educational attainment
5 dependents
55% college graduate
remittances
would allow for
more
clearly
defined
sub-
group of Filipino migrant workers. This paper contributes to the remittance literature by
studying how recipients of sea-based remittances differ in spending behavior from nonrecipients. The rest of the text is organized as follows: Section II describes the profile of
recipient households. Section III states the methodology, provides information on the data
used, and presents the results. Section IV analyzes the results and discusses the policy
implications of the study. Section V concludes.
WHO ARE THE SEAFARERS?

Amante (2005) presented characteristics of Overseas Filipino seafarers from the
2003 International Seafarers Database. The survey has a sample of 362 Filipino seafarers.
A majority of the sample comes from Visayas.
Figure 5: Summary characteristics of Filipino seafarers

Source: 2003 Seafarer International Research Center (SIRC) Database (Cardiff University)
Given that the size of remittances largely depends on seafarer income, and seafarer
income is determined by seafarers rank, it is interesting to know the seafarers distribution of
ranks. From the SIRC 2003 database, 72.2% of the seafarers belong to the low-ranks, the
ratings. Ratings earned an average of $995 in 2003. Assuming that these workers only remit
the required 80% of their incomes, the average monthly remittance is $796. Among Filipinos,
only 3 out of 10 seafarers are officials, while for Russians, the ratio is higher at 6 out of 10.
Annual deployment of seafarers by rank (2006-2013)

200,000
150,000
100,000
Annual deployment of seafarers by rank
50,000
Ratings
Officers
Non-marine
Year
Figure 6 shows the annual deployment of seafarers by rank. One can immediately
notice the u-shaped trend in number of deployed ratings, reaching the minimum on 2009,
and then surging back up a year later. The decline in deployment of Filipino ratings is
attributed to the 2008 Global Financial Crisis. There was a considerable reduction in exports
all over the world, and maritime transport, being responsible for 80% of world trade, and its
labor market were eventually affected (Pocuca & Zanne, 2009). Filipino seafarers were not
spared from the effect. But why then is there a considerable jump in employment of nonmarine officers if the crisis led to a fall in shipping transport? The shipping industry made
multiple adjustments5 in response to the decline in shipping transport activities during the
crisis. One of which was hot laying up 6. A total of 1,500 ships were in hot lay up on 2009, a
big jump from an average of only 200 from the previous years (JITI, 2010). This led to a
modification in the crew mix from predominantly employing ratings to employing non-marine
workers. Since a majority of Filipino seafarers are ratings, the decline in ratings deployment
FIGURE 6: Annual deployment of seafarers by rank (2006-2013)
Source: Philippine Overseas Employment Authority
on 2009 reflects the fall in the average annual remittance per seafarer on the same year, as
depicted in Figure 3. Hence, the seafarers were not spared from the Global Economic Crisis.
DATA AND METHODOLOGY

This study uses the 2009 Family Income and Expenditure Survey (FIES). This dataset
contains information on the sources of household income and on where households spent it
on the last 12 months prior to the survey. In this paper, I studied how being a recipient of
remittance approximately the size of that sent by seafarers change spending in behavior on
different expenditure categories and on savings. Changes in the share of spending on food,
non-food items, education, health, durable and non-durable goods are studied given that an
individual receives the imputed seafarer remittances.
Since other survey classified remittances by type of place of work (i.e., land-based or
sea-based), studying the spending behavior of the recipients of sea-based remittances is not
possible. To resolve this problem, I used the 2003 SIRC data on the average income of
ratings, the lowest among the seafarer ranks, and senior officers, the highest among the
ranks. Then, I approximated the average remittance sent in pesos, under the assumption
5 Adjustments made to financial crisis include ship scrapping, cancellation of orders of new ship building,
changes in ship type, lay up, and low speed operation. (JITI, 2008)
6 A hot lay up is when a ship is idle but a crew is readily available to operate the ship when needed. On the
other hand, a cold lay up is when a ship is taken of out of service because there is not enough crew to keep it
running.
that only the 80% of the POEA requirement is sent. The lower bound for the imputed
remittance for seafarer is PhP 345,000 while the upper bound is PhP 720,000. From Figure
6, it is shown that the imputed remittances distribution is reflective of the frequency
distribution as described in the SIRC (2003) database because the imputed remittance
distribution is skewed towards the imputed remittance sent by those at the top ranks.
Figure 6: Skewed imputed remittance income

distribution
Two big assumptions are made. First, it is assumed that the average income of
seafarers have not changed since 2003. There is an upward trend on wages in most labor
markets as wages are associated with the increasing standard of living. However, for
simplicity, the average income is assumed to be constant over time to allow for a quantitative
basis for the imputation of seafarer remittances. And second, it is assumed that the
households within the imputed remittance income distribution are recipients of sea-based
remittances, or at least the behavior of the households within the assumed income
distribution matches the behavior of households receiving remittances from seafarers. This
may not be true due to some other factors acting upon the decision-making processes of the
recipients on where to spend the remittance income. Theory suggests that the remitter has
intended use for the remittance, to which the recipient can choose to follow or to deviate
(IMF, 2008). The nature of employment of seafarers is distinct from land-based workers, and
this may act upon the seafarers decision on the intended use for the remittances. The data
does not reflect any characteristics that capture the distinguishing characteristics of the
seafarers work.
The main explanatory variable in the study is being a recipient of sea-based
remittances.
Control
variables
used
are
primarily household
socioeconomic
and
demographic characteristics. These variables are necessary to isolate the possible effects
acting on the primary explanatory variable and thus, reduce potential bias. While remittances
theory suggests the importance of including the characteristics of the remitter, these are
unfortunately not captured by the data. The chain of remittances behavior from motivation to
end-use is thus, bypassed to simply end use due to limitations with the data. Nonetheless,
the results of this analysis, though incomplete theoretically, serve policy implications on the
end of the remittance behavior chain, the recipients. Table 1 presents a summary statistics of
the variables involved.
Ordinary Least Squares (OLS) was used to estimate the partial effects of being a
recipient of seafarer remittances on the shares of different expenditure categories to total
household expenditures. The coefficients are derived by minimizing the residual sum of
squares,
u^
, such that the fitted regression line is closest to the actual line.
WHO ARE THE RECIPIENTS OF SEA-BASED REMITTANCES?

It is essential to understand the characteristics of the recipients of sea-based
remittances because they ultimately decide on how the remittance income will be used. Of
the 38,400 sample population, only 347 (0.9%) receive remittances between 345,000 and
720,000, which we will refer to as seafarer remittances for simplicity.
Number of households that received sea-based remittances by income decile

400
300
200
100
0
Income Decile
Household
receiving seafarer remittances are placed at the ninth and tenth deciles of the sample
income distribution. In fact, 91.4% of them are at the tenth decile. For these households,
remittance income comprises a large part of total household income. Thus, these
households rely largely on their seafarer relatives for their household spending. Being a
recipient of remittances may have led to a reduction in labor participation of households.
Figure 7: Income distribution of sample population
Figure 8: Share of remittance income to total household income
Figure 9: Number of households that received sea-based remittances per region
Number of households that received sea-based remittances per region

80
70
60
50
40
30
20
10
0
Figure 10: Savings of household receiving sea-based remittances
Figure 9 shows the savings distribution of households that received seafarer remittances. A
large number of households have low levels of savings. (Literature).
Sex of household heads receiving sea-based remittances
30%
male
female
70%
Figure 10: Sex of household heads receiving
Dependency ratio of households receiving sea-based remittances
16%
<1
(=)1
>1
18%
66%
Figure 11: Dependency ratio of households receiving sea-based remittances
Type of place of residence of households receiving remitances
22%
rural
urban
78%
Figure 12: Type of place of residence of households receiving sea-based

remittances
Figure 13: Educational attainment of household heads receiving sea-based

remittances
Educational attainment of household heads receiving sea-based remittances

No Grade Completed
Elementary undergraduate
0%3%
Elementary Graduate
7%
6%
38%
High School Undergraduate High School Graduate
20%
College graduate
24%
College Undergraduate
ESTIMATION RESULTS
Dependent variable
Coefficient
Savings (logarithmic)
Insignificant
Share of educational
spending to total
expenditures
Share of medical spending
to total spending
Share of food spending to
total spending
Share of durable goods
spending to total spending
Share of non-durable goods
spending to total spending
Share of interest-earnings to
total income
0.031**
Insignificant
0.024**
0.011**
Insignificant
-0.0018**
Table 1: Summary of OLS regression results

**Significant at the 0.05 confidence level.
Table 2 summarizes the results of the ordinary least squares estimation for the primary
explanatory variable, being a recipient of sea-based remittances.
Savings
Economic growth theories consider savings as essential to attain higher levels of

output and growth. Financial intermediaries channel savings into more productive uses in the
economy, such as capital accumulation, which leads to higher growth in real variables,
output, consumption, and capital. Solow (1956) wrote that savings push the maximum
potential output the economy can achieve in the very long run. A simple supply and demand
can demonstrate the impact of savings on the economy in the long run.
Interest rate
Ls1
LS2
R1
R2
LD
S1=I1S2=I2
Figure 6
increase
Savings, Investments
Figure 14: Supply and Demand for Loanable Funds
in
to an increase
shows that an
savings
leads
in the supply of
loanable funds, then a fall in the market rate of interest. A lower interest rate would attract
investments because the cost of borrowing to finance investments is lower. Thus, increased
savings result to a higher level of investments. An increase in investments would result to an
increase in aggregate demand, and thus, lead to an increase in the over-all level of output.
In the household level, savings would provide a source of income through interests, thus
allowing for an increase in future consumption, and serve as a cushion to shocks. Tables 2
and 3 show that being a recipient of seafarer remittances have significantly lower interest
incomes than non-recipients. It could be that recipients substitute away from saving
remittance income while they save more out of their own income.
However, the result of the OLS estimates suggests that savings behavior of
recipients of large amount of remittances does not differ from recipients of small amount and
non-recipients. Table 3 shows the complete results of the regression. It is important to
compare this result with the effect of the presence of a wage earner in the household. In
contrary to the effect of receiving seafarer remittances, a household that receives wage
income has higher savings than a household that does not receive one. It is not clear
whether this is by choice of the remitter or a result of an existing principal-agent problem.
Nonetheless, this warrants policies that would encourage savings out of remittance income.
While the preferences of the remitter may have a strong effect on the end-use of the
remittances, the recipient ultimately determines on how the remittances would be spent.
Hence, policies that alter savings behavior of the recipients are called for to encourage
savings in order to encourage investments, increase domestic output and eventually, its
growth rate.
Educational spending
Education is considered as a human capital. As educational level increases, the
productivity of the individual increases as well; thus, allowing the individual to earn higher
wages. Literature on the effect of a higher educational spending suggests an improvement
on quality of education and on student outcomes (Jackson, et al, 2015). In the regression
analysis, share of an expenditure category to total expenditures was used to determine
which expenditure categories become more valuable to the households as they receive seabased remittances.
Tables 2 & 4 show that recipients of seafarer remittances (i.e.,
remittances ranging from PhP 345,000 to 720,000) spend 3.1% more on education than
non-recipients. To understand further, consider two alternative states of world: being a
recipient of sea-based remittances and being a non-recipient. A non-recipient would spend
Php 10,000 out of a total of PhP 100,000 for schooling; while if he were receiving sea-based
remittances, he would spend PhP 13,000 out of PhP 100,000, holding effect of remittances
on total expenditures constant. This result holds among broadly categorized recipients of
sea-based remittances, yet this effect may not be the same among low-educated household
recipients.
An interaction term is made to account for the joint effect of educational spending
and the highest educational attainment of the household head. The results show that
household heads receiving sea-based remittances, yet whose education is only up to high
school do not increase the share of education on total household expenditures. This result
shows that the earlier result of increased share of educational spending among households
receiving sea-based remittances is conditional on the educational attainment of the
household head. One should note that the dependent variable used in this study is share of
educational spending to total households spending.
This result does not suggest that
educational spending is lower among low-educated household head recipients. To test for
this effect, a separate regression was made with educational spending as the dependent
variable. The result from Table 5 shows a significant negative coefficient. These two results
suggest a substitution away from educational spending to other categories of spending
among low-educated household head recipients. Noting the strong positive relationship
between receiving sea-based remittances and the educational attainment of the household
reconciles the latter two results with positive effect of receiving being a recipient of seafarer
remittances seen on the earlier regression analysis.
Medical spending
Results from the regression analysis show that being a recipient of sea-based
remittances does not increase the share of medical spending to total expenditures. Again,
this does not mean that non-recipients have the same medical spending as the recipients. In
fact, in a separate regression, it can be seen that recipients have higher spending on
medical care than non-recipients. The results suggest that the increase in medical spending
is a constant proportion of the increase in total expenditures such that the share of medical
spending on total pie between recipients and non-recipients is not different. The share of
medical spending is also not higher among college-educated recipients.
Demand for
medical care is often considered inelastic: i.e., individuals demand medical care only when
they really need to (Ringel, et al., 2005). To account for the effect of the inelasticity of the
demand for medical care, a regression is conducted with an interaction variable for being a
household that receives seafarer remittances and having a member aged 60 and above.
Individuals aged 60 and above have a more elastic demand for medical care; and thus,
receiving sea-based remittances would increase total medical spending by more than a
uniform proportion of an increase in total spending. The results show statistically significant,
positive coefficient for the interaction term; thus, suggesting that share of medical
expenditures increase among recipients of seafarer remittances if the recipient households
have an elderly member.
Durable goods expenditures
Durable goods include electronics, furniture, appliances and transportation
equipment. Regression results show that recipients of sea-based remittances have a
significantly higher spending on durable goods by 1.1%.
Food and non-durable goods expenditures
These two categories of expenditures are generally classified as consumption
expenditures. Food expenditures consist of spending on food consumed at home, food
consumed outside home, alcoholic beverages, and tobacco. Non-durable goods
expenditures consist of spending on utensils, accessories, linen and furnishings. Share of
non-durable goods to total expenditures is not different between a recipient and nonrecipient. Share of food expenditures, on the other hand, are higher among recipient
households by 2.4%. Furthermore, share of food expenditures are higher among households
of the lower income class and the less educated. This result is consistent with Engels Law:
as income increases and educational attainment improves, spending on other categories
increase. Food expenditures largely constitute spending among poor households. It is
interesting that recipients of seafarer remittances, while belonging to the top 20% of the
samples income distribution, have a higher share on food expenditures than their nonrecipient counterparts. In economic terms, the income effect of receiving seafarer
remittances is higher than the substitution effect. Meanwhile, the opposite is true when
receiving broad income, as shown from the decreasing share of food expenditures as
income status rises. This suggests that recipients treat sea-based remittances differently
from typical sources of household income. The same case is true on the effect of cash
transfers on share of food expenditures. Gilligan, et al (2013) have different explanations for
the stickiness of food consumption to cash transfers, which are used to explain its stickiness
to remittances income. One is that the seafarer remitter may have already labeled spending
priority for food. In the case that remitter has a different intended use for the remittance or
the remitter left the spending decision to the household head, the stickiness can be
explained by the fact that recipient household heads are mostly females. Gilligan, et al
(2013) argued that females tend to spend more on what would improve child outcomes,
such as on food. The same household head gender effect may be acting upon expenditure
behavior towards food.
On the other hand, the interaction of being a recipient of seafarer remittances and
deriving wage income reverses the effect seen earlier, making the result consistent with the
prediction of Engels Law. To put simply, households receiving sea-based remittances and
earning wage incomes have lower share of food spending by 4%. It is possible that having a
wider range of income sources result to a shift in intra-household bargaining. As remittances
theory suggests, if the household relies solely on seafarer remittances, then the remitter
largely determines food spending; while if the household has other sources of income on top
of the remittances, then the other household members earning income also determines food
spending
CONCLUSION
This paper analyzed the spending behavior of the recipients of sea-based
remittances by understanding how share of each expenditure category differs between
recipients and non-recipients of sea-based remittances. From studying household behavior,
we can make inferences on how seafarers via remittances, specifically contribute to the
economy. Using data from the 2009 Family Income and Expenditure Survey. Philippine
household surveys do not have a specific classification of remittances. As a resolution,
seafarer remittance recipients are assumed to be those who received between PhP 375,000
and PhP 720,000 of remittances in the year prior to the survey. These bounds are computed
by multiplying the average annual income of ratings, the lowest of the ranks, and the senior
officers, the highest, with the required remittance-income ratio of 80%.
Ordinary least square estimation results show that recipients of sea-based

remittances generally have higher food, durable goods and educational expenditures than
non-recipients. Interest earnings are significantly lower among recipients of sea-based
remittances. This result is consistent with the insignificant result for savings.
Results suggest that seafarers contribute to the economy by human capital
accumulation, rather than capital accumulation, as reflected by the increased share of
educational spending due to their remittances. Higher spending on education leads to a
higher level of human capital; this, in turn, leads to higher workforce productivity and
consequently, a higher level of output of the next generation. However, this is not entirely
true of all households. Household heads with low educational attainment do not increase
share of educational spending, and spend lower, in absolute terms, on education than nonrecipients. Policies can be directed to encourage increased educational spending among this
subset of recipients of seafarer remittances.
Furthermore, seafarer remittances can be diverted towards increased savings by
reducing the share of food expenditures. This suggests that households tend to spend
remittances on non-productive uses as consistent with results in the remittance literature.
Policies directed to encouraging savings are called for. Alternatively, information on
investment opportunities can be disseminated. While banks offer special financial
opportunities for seafarers, perhaps, this should come with financial literacy programs that
would provide information on the opportunities being offered by financial intermediaries.
REFERENCES:
DEPENDENT VARIABLE: SAVINGS (In logarithmic form)

Variabl
Variable definition
Coefficien
e
t
w_sfr
1 = respondent receives remittance income
between 345, 000 and 720, 000
-0.049
w_wag 1 = household has at least a member who
es
earns wages
0.246**
sfr_wrk 1 = receives seafarer remittances and has a
household member that earns wages
0.558
male 1 = household head is male
-0.027
marrie 1 = household head is married
d
-0.315**
w_job 1 = household head is working
0.189**
urban 1 = urban household
-0.315**
region 1 = household belongs to Ilocos Region
1
-1.063**
region 1 = household belongs to Cagayan Valley
2
-0.648**
region 1 = household belongs to Central Luzon
3
-1.416**
region 1 = household belongs to Bicol Region
4
-1.792**
region 1 = household belongs to Western Visayas
5
-1.572**
region 1 = household belongs to Central Visayas
6
-0.457**
P-value
0.874
0.000
0.220
0.718
0.000
0.005
0.000
0.000
0.000
0.000
0.000
0.000
0.001
region
1 = household belongs to Eastern Visayas
7
region
8
0.000
-0.968**
1 = household belongs to Zamboanga

Peninsula
1 = household belongs to Northern Mindanao
region
9
region1 1 = household belongs to Southern Mindanao
0
region1 1 = household belongs to Central Mindanao
1
region1 1 = household belongs to NCR
2
region1 1 = household belongs to CAR
3
region1 1 = household belongs to Caraga
5
region1 1 = household belongs to CALABARZON
6
region1 1 = household belongs to MIMAROPA
7
hhsize Number of members in the household
educ1 No grade completed
educ2 Elementary undergraduate
educ3 Elementary graduate
educ4 High School undergraduate
educ5 High School graduate
educ6 College undergraduate
deciles 1= belongs to the first income decile
1
deciles 1= belongs to the second income decile
2
deciles 1= belongs to the third income decile
3
deciles 1= belongs to the fourth income decile
4
deciles 1= belongs to the fifth income decile
5
deciles 1= belongs to the sixth income decile
6
deciles 1= belongs to the seventh income decile
7
deciles 1= belongs to the eighth income decile
8
deciles 1= belongs to the ninth income decile
9
age
Age of the respondent
age2 Square of the age of the respondent
dpdratio Dependency ratio
_cons Constant term
R-squared: 0.2605
0.138
0.225
0.000
-0.810**
0.000
-0.841**
0.000
-1.058**
0.000
-2.109**
0.000
-1.144**
0.000
-0.894**
0.000
-1.665**
0.058
-0.288*
-0.310**
1.423**
1.191**
1.064**
0.894**
0.666**
0.294**
0.000
0.000
0.000
0.000
0.000
0.000
0.002
0.000
-9.810**
0.000
-8.353**
0.000
-7.243**
0.000
-6.283**
0.000
-5.438**
0.000
-4.470**
0.000
-3.621**
0.000
-2.827**
0.000
-1.664**
-0.035**
0.000**
-0.136**
14.093**
0.000
0.000
0.000
0.000
DEPENDENT VARIABLE: SHARE OF EDUCATIONAL SPENDING TO TOTAL

SPENDING
Variable
Variable definition
Coefficien
t

between 345, 000 and 720, 000
0.031**
w_wage 1 = household has a member who earns
s
wages
-0.009**
sfr_wrk
1 = receives seafarer remittances and has
a household member that earns wages
0.001
male
1 = household head is male
-0.005**
DEPENDENT
SHARE
MEDICAL EXPENDITURES
TO
married VARIABLE:
1 = household
headOF
is married
0.005**
SPENDING
w_job
1 = household head is working
0.002**
Variable
definition
Coefficien
urbanVariable
1 = urban
household
-0.004**
t
region1
1 = household belongs to Ilocos Region
0.004**
w_sfr
region2
1 = household belongs to Cagayan Valley
0.015**
between 345, 000 and 720, 000
0.006
region3
1 = household belongs to Central Luzon
0.002
region4
1
=
household
belongs
to
Bicol
Region
0.005**
s
wages
-0.005**
region5
1
=
household
belongs
to
Western
Visayas
0.007**
sfr_wrk
region6
1 = household
belongs
to Central
0.006**
a household
member
that earns
wagesVisayas 0.000
region7
1 = household
0.008**
male
1 = household
headbelongs
is male to Eastern Visayas 0.002**
region8
1
=
household
belongs
to
Zamboanga
0.002
married
1 = household head is married
0.000
Peninsula
w_job
-0.009**
region9
1 = household
belongs to Northern Mindanao
0.009**
urban
1 = urban
household
-0.002**
region10
1
=
household
belongs
to
Southern
Mindanao
0.003*
region1
0.005**
region11
1 = household
belongs
to Central
Mindanao0.010**
0.008**
region2
1 = household
belongs
to Cagayan
Valley
region12
1
=
household
belongs
to
NCR
-0.009**
region3
0.007**
region13
1
=
household
belongs
to
CAR
0.019**
region4
1 = household belongs to Bicol Region
0.011**
region15
1
=
household
belongs
to
Caraga
0.010**
region5
1 = household belongs to Western Visayas
0.015**
region16
1
=
household
belongs
to
CALABARZON
0.000
region6
1 = household belongs to Central Visayas
0.009**
region17
1 = household
belongs
to MIMAROPA
0.008**
region7
1 = household
belongs
to Eastern
Visayas
0.012**
hhsize
Number
of
members
in
the
household
0.001**
region8
educ1Peninsula
No grade completed
-0.015**
0.009**
educ2
Elementary
undergraduate
-0.013**
region9
1 = household belongs to Northern Mindanao 0.010**
educ31 = household
Elementarybelongs
graduate
-0.012**
region10
to Southern Mindanao 0.010**
educ4
High
School
undergraduate
-0.011**
0.017**
educ5
High
School
graduate
-0.008**
-0.004**
educ6
College
undergraduate
-0.002*
0.009**
deciles1
1= belongsbelongs
to the first
income decile
-0.047**
region15
1 = household
to Caraga
0.010**
deciles2
1= belongsbelongs
to the second
income decile
-0.044**
region16
1 = household
to CALABARZON
0.007**
deciles3
1=
belongs
to
the
third
income
decile
-0.043**
0.013**
deciles4
1=
belongs
to
the
fourth
income
decile
-0.038**
hhsize
Number of members in the household
-0.0028**
deciles5
1= belongs
to the fifth income decile
-0.035**
educ1
No grade
completed
-0.002
deciles6
1= belongs
to the sixth income decile
-0.030**
educ2
Elementary
undergraduate
0.001
deciles7
1=
belongs
to
the
seventh
income
decile
-0.025**
educ3
Elementary graduate
0.003**
deciles8
1=
belongs
to
the
eighth
income
decile
-0.015**
educ4
High School undergraduate
0.004**
deciles9
belongs
to the ninth income decile
-0.005**
educ5
High1=
School
graduate
0.004**
Ageundergraduate
of the respondent
0.002**
educ6age College
0.001
age2
Square
of
the
age
of
the
respondent
0.000**
deciles1
1= belongs to the first income decile
-0.034**
dpdratio
Dependency
ratio
-0.003**
deciles2
1= belongs to the second income decile
-0.027**
_cons1= belongs
Constant
0.022**
deciles3
to term
the third income decile
-0.024**
R-squared
: 0.1332
deciles4
1= belongs
to the fourth income decile
-0.021**
deciles5
1= belongs to the fifth income decile
-0.018**
deciles6
1= belongs to the sixth income decile
-0.016**
deciles7
1= belongs to the seventh income decile
-0.013**
deciles8
1= belongs to the eighth income decile
-0.010**
deciles9
1= belongs to the ninth income decile
-0.005**
age
-0.001**
age2
Square of the age of the respondent
0.000**
dpdratio
Dependency ratio
0.000
_cons
Constant term
0.063
R-squared: 0.0624
Pvalue
w_sfr
0.00
0.00
0.85
0.00
TOTAL
0.00
0.02
P- 0.00
value
0.03
0.00
0.128
0.15
0.00
0.000
0.00
0.00
0.996
0.00
0.027
0.30
0.948
0.000
0.00
0.000
0.06
0.003
0.00
0.000
0.00
0.000
0.00
0.000
0.00
0.000
0.84
0.000
0.00
0.000
0.00
0.00
0.000
0.00
0.000
0.00
0.000
0.00
0.000
0.00
0.037
0.06
0.000
0.00
0.000
0.00
0.000
0.00
0.000
0.00
0.000
0.00
0.238
0.00
0.413
0.00
0.005
0.00
0.002
0.00
0.000
0.00
0.456
0.00
0.000
0.00
0.000
0.00
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.871
0.000
DEPENDENT VARIABLE: SHARE OF FOOD EXPENDITURES TO TOTAL

SPENDING
Variabl
Variable definition
Coefficien
Pe
t
value
w_sfr
between 345, 000 and 720, 000
0.024**
0.001
w_wag 1 = household has at least a member who
es
earns wages
0.015**
0.000
sfr_wrk 1 = receives seafarer remittances and has a
household member that earns wages
-0.040**
0.000
male 1 = household head is male
-0.001
0.474
marrie 1 = household head is married
d
0.010**
0.000
w_job 1 = household head is working
0.009**
0.000
DEPENDENT
VARIABLE:
EXPENDITURE TO
urban
1 = urban
householdSHARE OF DURABLE GOODS
0.004**
0.000
TOTAL SPENDING
region 1 = household belongs to Ilocos Region
Variable
Variable definition
Coefficien
P1
-0.005
0.152
t
value
region 1 = household belongs to Cagayan Valley
w_sfr
1 = respondent receives remittance income 0.011**
0.008
2
-0.008**
0.012
between 345, 000 and 720, 000
region 1 = household belongs to Central Luzon
w_wage 1 = household has a member who earns 0.000
0.545
3
-0.019**
0.000
s
wages
region 1 = household belongs to Bicol Region
sfr_wrk
1 = receives seafarer remittances and has 0.003
0.644
4
-0.012**
0.000
region 1 = household belongs to Western Visayas
male
0.001
0.374
5
-0.021**
0.000
married
1
=
household
head
is
married
0.002*
0.063
region 1 = household belongs to Central Visayas
w_job
1
=
household
head
is
working
0.000
0.636
6
-0.001
0.686
urban
1
=
urban
household
-0.004**
0.000
region 1 = household belongs to Eastern Visayas
region1
0.003
0.116
7
-0.018**
0.000
region2
household belongs
Cagayan
Valley
0.007**
0.000
region
1 =1 =household
belongs to to
Zamboanga
8
Peninsula
-0.004
0.307
region3
0.000
0.833
region
1 = household
belongs
to Northern
region4
1 = household
belongs
to BicolMindanao
Region
0.010**
0.000
9
-0.020**
0.000
region5
0.009**
0.000
region1
1 = household
belongs
to Southern
Mindanao
region6
1 = household
belongs
to Central
Visayas
0.005**
0.010
0
-0.011**
0.001
region7
0.007**
0.000
region8
1 = household belongs to Zamboanga 0.014**
0.000
1
-0.013**
0.000
Peninsula
region9
0.000
2
-0.016**
0.000
region10
1 = household
belongs
to Southern Mindanao 0.009**
0.000
region1
1 = household
belongs
to CAR
region11
1
=
household
belongs
to
Central
Mindanao
0.011**
0.000
3
-0.042**
0.000
region12
1
=
household
belongs
to
NCR
-0.005**
0.008
region13
1
=
household
belongs
to
CAR
-0.002
0.256
5
-0.017**
0.000
region15
1 = household
belongs
to Caraga
0.014**
0.000
region1
1 = household
belongs
to CALABARZON
6 region16 1 = household belongs to CALABARZON
-0.018**
0.000
-0.001
0.454
region1
1 = household
belongs
to MIMAROPA
region17
1 = household
belongs
to MIMAROPA
0.013**
0.000
7
-0.039**
hhsize
-0.002** 0.000
0.000
hhsize
Number
of
members
in
the
household
0.019**
0.000
educ1
No grade completed
0.004**
0.044
educ1
No grade
completed
0.071**
educ2
Elementary
undergraduate
0.004** 0.000
0.000
educ2
Elementary
undergraduate
0.060**
educ3
Elementary
graduate
0.004** 0.000
0.001
educ3
Elementary
graduate
0.051**
educ4
High School
undergraduate
0.007** 0.000
0.000
educ4
High
School
undergraduate
0.045**
0.000
educ5
High School graduate
0.005**
0.000
educ5
High College
School graduate
0.037**
educ6
undergraduate
0.005** 0.000
0.000
educ6
College
0.023**
deciles1
1= undergraduate
belongs to the first income decile
-0.042** 0.000
0.000
deciles
1= belongs
to thetofirst
deciles2
1= belongs
the income
second decile
income decile
-0.038**
0.000
1 deciles3
0.313**
0.000
1= belongs to the third income decile
-0.033**
0.000
deciles 1= belongs to the second income decile
deciles4
1= belongs to the fourth income decile
-0.030**
0.000
2
0.274**
0.000
deciles5
-0.025**
0.000
deciles 1= belongs to the third income decile
deciles6
1=
belongs
to
the
sixth
income
decile
-0.020**
0.000
3
0.252**
0.000
deciles7
1=
belongs
to
the
seventh
income
decile
-0.015**
0.000
deciles 1= belongs to the fourth income decile
-0.010** 0.000
0.000
4 deciles8
0.226**
deciles9
1= belongs
the income
ninth income
-0.009**
0.000
deciles
1= belongs
to thetofifth
decile decile
5
0.203**
0.000
deciles 1= belongs to the sixth income decile
6
0.175**
0.000
deciles 1= belongs to the seventh income decile
7
0.144**
0.000
deciles 1= belongs to the eighth income decile
8
0.111**
0.000
age
age2
dpdratio
Dependency ratio
_cons
Constant term
R-squared: 0.0448
0.000**
0.000
0.000
0.050**
0.006
0.230
0.649
0.000
DEPENDENT VARIABLE: SHARE OF NON DURABLE GOODS EXPENDITURES

TO TOTAL SPENDING
Variable
Variable definition
Coefficien
Pt
value
w_sfr
between 345, 000 and 720, 000
0.000
0.469
s
wages
0.000
0.430
sfr_wrk
0.000
0.771
male
-0.0004**
0.000
married
0.0003**
0.000
w_job
0.000**
0.001
urban
1 = urban household
0.000**
0.000
region1
-0.002**
0.000
region2
-0.002**
0.000
region3
-0.002**
0.000
region4
-0.001**
0.000
region5
-0.002**
0.000
region6
-0.002**
0.000
region7
-0.002**
0.000
region8
Peninsula
-0.001**
0.000
region9
1 = household belongs to Northern Mindanao -0.001**
0.000
region10 1 = household belongs to Southern Mindanao -0.002**
0.000
-0.001**
0.000
-0.002**
0.000
-0.002**
0.000
-0.001**
0.000
-0.002**
0.000
-0.001**
0.000
hhsize
0.000**
0.000
educ1
No grade completed
0.000
0.557
educ2
0.000**
0.008
educ3
Elementary graduate
0.000**
0.040
educ4
0.000
0.217
educ5
0.000
0.656
educ6
College undergraduate
0.000
0.523
deciles1
-0.001**
0.000
deciles2
-0.001**
0.000
deciles3
-0.001**
0.000
deciles4
-0.001**
0.000
deciles5
-0.001**
0.000
deciles6
-0.001**
0.000
deciles7
0.000**
0.000
deciles8
0.000**
0.002
deciles9
age
age2
dpdratio
Dependency ratio
_cons
Constant term
R-squared: 0.0212
0.000**
0.000**
0.000*
0.000
0.005**
DEPENDENT VARIABLE: SHARE OF INTEREST EARNINGS TO

INCOME
Variable
Variable definition
Coefficien
t
w_sfr
1 = household receives remittance income
between 345, 000 and 720, 000
-0.0018**
s
wages
-0.0008**
sfr_wrk
0.0011
male
0.0000
married
-0.0001
w_job
-0.0001
urban
1 = urban household
-0.0002
region1
0.0004
region2
0.0010**
region3
0.0003
region4
0.0008**
region5
0.0003
region6
0.0005*
region7
0.0007**
region8
Peninsula
0.0008**
region9
region10 1 = household belongs to Southern Mindanao 0.0004
0.0017**
0.0002
0.0010**
0.0005*
0.0000
0.0011**
hhsize
-0.0001**
educ1
No grade completed
-0.0004
educ2
0.0000
educ3
Elementary graduate
0.0001
educ4
-0.0001
educ5
0.0001
educ6
0.0001
deciles1
-0.0025**
deciles2
-0.0024**
deciles3
-0.0021**
deciles4
-0.0022**
deciles5
-0.0020**
deciles6
-0.0018**
deciles7
-0.0017**
0.028
0.002
0.077
0.978
0.000
TOTAL
Pvalue
0.003
0.000
0.241
0.948
0.621
0.409
0.128
0.159
0.001
0.348
0.004
0.311
0.070
0.010
0.011
0.006
0.121
0.000
0.537
0.001
0.080
0.977
0.000
0.000
0.172
0.898
0.681
0.723
0.618
0.567
0.000
0.000
0.000
0.000
0.000
0.000
0.000
deciles8
deciles9
age
age2
dpdratio
Dependency ratio
_cons
Constant term
R-squared: 0.0089
SUMMARY STATISTICS
Variabl
Variable definition
e
sh_nfd
ln_save
sh_dur
sh_irr
sh_ndg
Share of non-food expenditures to total

expenditures
Logarithmic form of savings (total income
total expenditures)
Share of durable goods expenditures to
total expenditures
male
marrie
Share of non- durable goods expenditures

to total expenditures
Share of food expenditures to total
expenditures
Share of educational expenditures to total
expenditures
Share of medical expenditures to total
expenditures
Share of housing expenditures to total
expenditures
1=household receives remittance income
between 345, 000 and 720, 000
1 = household has a member who earns
wages
1 = receives seafarer remittances and
has a household member that earns
wages
w_job
urban
region

1 = urban household
region
region
region
region
region
sh_food
sh_educ
sh_medi
c
sh_hous
e
w_sfr
w_wag
es
sfr_wrk
1
2
3
4
5
6
-0.0017**
-0.0012**
0.0000
0.0000
0.0000
0.0032**
0.000
0.000
0.824
0.856
0.903
0.000
Mean
Std.
Deviatio
n
Minimu
m
Maximu
m
0.485
0.143
0.098
0.978
6.399
4.840
17.177
0.016
0.001
0.055
0.008
0
0
0.880
0.370
0.002
0.004
0.210
0.515
0.143
0.022
0.902
0.028
0.056
0.675
0.022
0.054
0.883
0.110
0.081
0.002
0.812
0.009
0.095
0.741
0.438
0.004
0.796
0.062
0.403
0
0
1
1
0.780
0.831
0.451
0.414
0.375
0.498
0
0
0
1
1
1
0.059
0.236
0.050
0.217
0.079
0.270
0.058
0.233
0.068
0.251
0.066
0.248
region
region

Peninsula
1 = household belongs to Northern
Mindanao
1 = household belongs to Southern
Mindanao
1 = household belongs to Central
Mindanao
1 = household belongs to NCR
7
8
region
9
region1
0
region1
1
region1
2
region1
3
region1
5
region1
6
region1
7
hhsize
educ1
educ2
educ3
educ4
educ5
educ6
deciles
1
deciles
2
deciles
3
deciles
4
deciles
5
deciles
6
deciles
7
deciles
8
deciles
9
age
age2
dpdratio
0.052
0.223
0.043
0.203
0.046
0.210
0.056
0.230
0.050
0.218
0.112
0.315
0.041
0.199
0.041
0.198
0.095
0.294
0.043
4.747
0.031
0.220
0.191
0.120
0.215
0.114
0.204
2.232
0.174
0.414
0.393
0.325
0.411
0.317
0
1
0
0
0
0
0
0
1
24
1
1
1
1
1
1
0.111
0.314
0.110
0.313
0.108
0.310
0.105
0.306
0.100
0.300
0.097
0.296
0.095
0.293
0.092
0.288
0.092
50.05
2698.8
5
0.562
0.289
13.933
0
11
1
99
1486.651
0.665
121
0
9801
7
1 = household belongs to CAR

1 = household belongs to Caraga
1 = household belongs to CALABARZON
1 = household belongs to MIMAROPA
No grade completed
Elementary graduate
Dependency ratio

Seafarer Remittances and The Economy

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Seafarer Remittances and The Economy

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INTRODUCTION

Seafarers remittances are an important component of our countrys economic

Remittances of Sea-based OFWs: 2003-2013

Figure 1: Remittances of Sea-based OFWs (2003-2013)

Annual deployment of Filipino seafarers: 1984- 2013

# of Filipino seafarers deployed

Average annual remittances by a Filipino seafarer (in US$)

Figure 3: Average annual remittances sent by a Filipino seafarer

Average annual remittances by land-based workers (in US$)

Figure 4: Average annual remittances by a land-based OFW

productively, rather than squandered through conspicuous consumption. Furthermore,

Age at first time work

73% are married

WHO ARE THE SEAFARERS?

Figure 5: Summary characteristics of Filipino seafarers

Annual deployment of seafarers by rank (2006-2013)

DATA AND METHODOLOGY

Figure 6: Skewed imputed remittance income

WHO ARE THE RECIPIENTS OF SEA-BASED REMITTANCES?

Number of households that received sea-based remittances by income decile

Figure 7: Income distribution of sample population

Figure 8: Share of remittance income to total household income

Figure 9: Number of households that received sea-based remittances per region

Number of households that received sea-based remittances per region

Figure 10: Savings of household receiving sea-based remittances

Sex of household heads receiving sea-based remittances

Figure 10: Sex of household heads receiving

Dependency ratio of households receiving sea-based remittances

Figure 11: Dependency ratio of households receiving sea-based remittances

Type of place of residence of households receiving remitances

Figure 12: Type of place of residence of households receiving sea-based

Figure 13: Educational attainment of household heads receiving sea-based

Educational attainment of household heads receiving sea-based remittances

Table 1: Summary of OLS regression results

Economic growth theories consider savings as essential to attain higher levels of

Figure 14: Supply and Demand for Loanable Funds

Tables 2 & 4 show that recipients of seafarer remittances (i.e.,

This result does not suggest that

Ordinary least square estimation results show that recipients of sea-based

DEPENDENT VARIABLE: SAVINGS (In logarithmic form)

1 = household belongs to Eastern Visayas

1 = household belongs to Zamboanga

DEPENDENT VARIABLE: SHARE OF EDUCATIONAL SPENDING TO TOTAL

1 = respondent receives remittance income

DEPENDENT VARIABLE: SHARE OF FOOD EXPENDITURES TO TOTAL

DEPENDENT VARIABLE: SHARE OF NON DURABLE GOODS EXPENDITURES

DEPENDENT VARIABLE: SHARE OF INTEREST EARNINGS TO

Share of non-food expenditures to total

Share of non- durable goods expenditures

1 = household head is working

1 = household belongs to Cagayan Valley

1 = household belongs to Central Luzon

1 = household belongs to Bicol Region

1 = household belongs to Western Visayas

1 = household belongs to Central Visayas

1 = household belongs to Eastern Visayas

1 = household belongs to Zamboanga

1 = household belongs to CAR

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