Remittances in El Salvador
This honors thesis investigates the uses of remittances, or transfers of money from someone working abroad to friends or family in their home country, among households in El Salvador. One in five households in El Salvador receives remittances, and for many, these inflows serve as a vital source of income to support basic needs. This Honors Thesis seeks to answer two questions: Do households in El Salvador that receive remittances demonstrate different saving and consumption behaviors than those that do not? Additionally, within the population that does receive remittances, does the amount of the remittances received determine the magnitude of the change in household saving and consumption? In general, the thesis aims to understand the relationship between remittance inflows and household economic decisions, looking at how the two influence each other and what effect their relationship has on the sustainable human development of migrant families. By examining both qualitative and quantitative sources, this thesis is able to understand the economic and social factors that affect transnational households’ uses of remittances. Using the Encuesta de Hogares de Propósitos Múltiples, a household survey conducted by the Salvadoran government, and secondary interview sources, this thesis finds that remittance- receiving households tend to spend a greater proportion of their income than their peers, that there is no statistically significant relationship between remittance inflows and saving, and that a variety of factors, including family dynamics and emotional connections, affect how remittances are used.