Remittances and healthcare consumption: human capital investment or responses to shocks? Evidence from Peru

This paper estimates the effect of international remittances on healthcare consumption. We test whether consumption decisions of remittance-receiving households with respect to healthcare are driven by the occurrence of health shocks or reveal different preferences to invest in human capital. Using data from the “Peruvian National Survey of Households”, we find that remittances have a positive impact on healthcare consumption shares and a negative one on consumption goods, net of the remittance-related income effect. This suggests a tendency to devote larger shares of income from remittances to human capital investment, compared to other sources of income. This propensity is independent of the occurrence of a health shock, confirming the role of migrant transfers for human capital accumulation.