The Effect of Remittances on Household Healthcare Expenditures in Ghana
While the causal relationship between remittances and household welfare is well explored, the specific effect of remittance income on household healthcare expenditure remains thin on the ground. Thus, this paper investigates the effect of remittances on healthcare expenditures in Ghana using the Ghana Living Standards Survey (GLSS) Round 6 data. Means of remittances transfer are employed as an instrument in order to correct for the possible endogeneity of remittance income and household healthcare expenditures. We find that remittance income increases household healthcare expenditures. Approximately GHȼ0.20 of every GHȼ1.00 increment in remittance income is spent on healthcare. The sensitivity of healthcare expenditure to changes in the level of remittances is about three and a half times greater than its responsiveness to changes in non-remittance household income. Based on these findings, it is recommended that policies be enacted to facilitate the flow of remittances as they represent a significant source for household healthcare expenditures.
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