Do Remittances Act Like Insurance? Evidence from a Natural Disaster in Jamaica (Working Paper)

Clarke, George R.G., Wallsten, Scott


This paper examines whether remittances can insure households against income shocks, using a longitudinal household-level data set from Jamaica. The panel dataset includes remittance information as well as detailed self-reported information about damage incurred due to a major hurricane (Hurricane Gilbert in 1988). The authors conclude that remittances act as insurance, but only partially: parameter estimates suggest that remittances increased by only about 25 cents for every dollar of hurricane damage experienced by a given household. The authors rely on household fixed effects to deal with unobserved heterogeneity and potential moral hazard problems.