This policy brief answers three main questions for the Jamaican economy: (a) Do remittances act as a safety net during negative health shocks? (b) Are remittances subject to moral hazard by receivers? (c) How does formal health insurance interact with remittances as a safety net during adverse health episodes? Evidence suggests that remittances offer full protection against decreased consumption during health shocks, that they are not subject to moral hazard by receivers and that they are particularly relevant among beneficiaries of publicly provided health insurance. These results indicate that relatively higher emphasis could be placed on fostering policies aimed at reducing transaction costs for sending and receiving remittances over policies aiming at increasing senders’ control over the use of remittances; and on identifying beneficiaries of public health insurance schemes (without access to private health insurance) who do not receive remittances as a particularly vulnerable population where targeting of complementary safety nets could be directed.
Diether W. Beuermann
Diether W. Beuermann is a Senior Economist in the Caribbean Country Department of the Inter-American Development Bank. He has led research and data collection projects in various countries including Barbados, Guyana, Jamaica, Peru, Russia, Suriname, The Bahamas, Democratic Republic of Congo, Trinidad and Tobago, and the United States. His research has covered the effects of different information and communication technologies on agricultural profitability, child labor, academic performance, pre-natal care, and neo-natal health. He has also conducted research on the effectiveness of participatory budgeting, the short- and long-run effects of educational quality, the role of remittances as a social insurance mechanism, the effects of early-life weather shocks on short- and long-term human capital accumulation, the effects of public health insurance on health outcomes and labor supply, the effects of behavioral-based entrepreneurship training on firm profitability, the effects of blue-collar crime on financial access and credit prices of affected firms, and the effectiveness of math-focused parenting programs. He has published in several international peer-reviewed journals, including the American Economic Journal: Applied Economics, Journal of Human Resources, Journal of Health Economics, Journal of Development Economics, Economics of Governance, and Economics and Human Biology. He holds a B.A. in business management and a B.Sc. in economics from the Universidad de Lima, a M.Sc. in finance from the University of Durham, and a M.A. and Ph.D. in economics from the University of Maryland-College Park.