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, born in Peru, earned a PhD and an MA in Economics at the University of Maryland-College Park; and an MSc in Finance at the University of Durham. He is a senior economist in the Caribbean Country Department at the Inter-American Development Bank.