Remittances as a Safety Net in Jamaica

Oct 2014
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.