Philippines treatment of remittances in nta rachel h racelis j m ian s salas
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Philippines: Treatment of Remittances in NTA Rachel H. Racelis J.M. Ian S. Salas. SKKU, Seoul, Korea 5 Nov 2007. Introduction. NTA aggregate control for labor income: YL = (2/3)*household operating surplus + compensation of employees But, Compensation = compensation from residents

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Philippines: Treatment of Remittances in NTA Rachel H. Racelis J.M. Ian S. Salas

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Philippines treatment of remittances in nta rachel h racelis j m ian s salas
Philippines: Treatment of Remittances in NTARachel H. RacelisJ.M. Ian S. Salas

SKKU, Seoul, Korea

5 Nov 2007


Introduction
Introduction

  • NTA aggregate control for labor income:

    YL = (2/3)*household operating surplus

    + compensation of employees

    But,

    Compensation = compensation from residents

    + compensation from ROW

    - compensation to ROW

  • Age profile of compensation from/to ROW may be different from those of residents.




Net compensation from to row
Net compensation from/to ROW

  • We try to construct age profiles for net compensation from ROW, but remember that this has inflow and outflow components.

  • Since 1997, however, Philippine NIA indicates zero compensation to the ROW.

  • If compensation to ROW is significant, how do we construct age profiles for it?


Methodology assumptions
Methodology assumptions

  • While NIA has compensation of non-resident employees (overseas worker), what we can get from survey at this time is compensation net of consumption, assuming that the overseas worker:

    • did not receive transfers (public and private),

    • did not acquire nor sold assets,

    • did not borrow or dis-save, and

    • sent remittances to only one household at home.

  • The constructed age profile would be valid if the proportion of consumption to income is the same for all overseas workers.


Available surveys
Available surveys

  • Labor Force Survey (LFS), quarterly

    • Jan, Apr, Jul, Oct; past-week activity

    • Individual-level

  • Annual Poverty Indicators Survey (APIS), every Oct of non-FIES year (triennial)

    • rider to Oct round of LFS, 6-month coverage

    • Household- and individual-level

  • Survery of Overseas Filipinos (SOF), annual

    • rider to Oct round of LFS, 6-month coverage

    • Individual-level; respondent is reporting household member


Survey details
Survey details

  • APIS excludes overseas Filipinos in its household roster.

  • SOF coverage:

    • overseas Filipinos who went abroad within the past five years (if >5 years, considered “immigrant”)

    • asks if overseas Filipino worked abroad

    • asks the reason for leaving of overseas Filipino and date of return or expected return

    • n:1 but not 1:n relationship between overseas Filipinos attached to households


Some notes on 1999 estimation
Some notes on 1999 estimation

  • 97% of contract workers left five times or less during the previous five years.

    • Indicates that most contract workers may have yearly renewable contracts.

  • APIS: 37,454 households; 188,671 individuals

  • SOF: 1,897 households; 2,174 individuals

  • In the following, suffixes _h and _m refer to household-level or individual-level data, respectively.


Data items used apis h
Data items used: APIS_h

  • giftin_abroad_h: “cash receipts, gifts, support, relief and other forms from abroad for past six months, in cash”

    • may include remittances received from overseas Filipinos which are not attached to the household (immigrant relatives, friends, etc.)

  • No usable item in APIS_m


Data items used sof m
Data items used: SOF_m

  • remittance_m: “cash remittance received” + “cash brought home”


Data items used sof m1
Data items used: SOF_m

  • “reason for leaving the country”

    • Encoded answers:

    • Contract worker

    • Work with Phil. Consulate/Embassy abroad

    • Worker other than contractual

    • Tourist

    • Student

    • Immigrant

    • Official missions

    • Others

    • Different treatment relative to survey definition of overseas worker (arrows + employed).


Data items used sof m2
Data items used: SOF_m

  • “had work/job last stay abroad”


Reintegration of overseas filipinos
Reintegration of overseas Filipinos

  • Merge household-file and member-file of APIS, then merge this with SOF_m.

  • Use individual weights from both surveys (each calibrated to correspond to census numbers).

    • Weights of members of household may be different from overseas Filipino/s attached to it (true for 1999 but not for 2002).


Overseas worker definition
Overseas worker definition

  • Overseas Filipino must satisfy both of the following for remittance to be considered as net compensation from ROW:

    • be away from his/her household temporarily (to establish continuing ties as member of the household)

    • be employed (for remittance to be considered as labor income)

  • Otherwise, remittance will be classified as inter-household transfer from ROW.

  • remittance_h = comp_ROW_h + inter_ROW_h


Adjustments
Adjustments

  • Ideally, remittance_h (SOF) == giftin_abroad_h (APIS)

  • If >, scale remittance_h to giftin_abroad_h and apply to comp_ROW_m and inter_ROW_m accordingly.

  • If <, residual is treated as additional inter_ROW_h.

  • Is residual attributable to households receiving remittances from “immigrant” overseas Filipinos (not covered by the SOF survey), or is it due to reporting error?


Remaining issues
Remaining issues

  • Aggregate control to use for inter-household transfers from ROW (in practice, does net compensation from ROW in NIA exclude remittances unrelated to labor income?)

  • Survey representativeness: Only 1,897 households have overseas Filipinos, as defined in the survey (some of which were not employed abroad), while 4,682 households receive cash gifts from abroad, so that inter-HH transfers much bigger than labor income of overseas workers.


Some notes
Some notes

  • Overseas household member sometimes designated as household head, so that resident household head may only be a “substitute” head

    • we still used “substitute” as head in those cases

  • Intra-household inflows of overseas workers are zero but outflows are positive as they directly contribute to disposable income (since labor income is already net of consumption).






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