Identifying the Causal Impact of Remittances on Food Insecurity: Evidence from HFPS Data

Abstract

Remittances are one of the largest and most stable financial inflows to developing countries, often surpassing foreign aid and foreign direct investment. While research in the area suggest remittances reduce poverty and Food Insecurity, much of it is country specific, or uses older data. This paper examines how remittances affect household food insecurity across six middle-income countries — the Philippines, Georgia, Mexico, Guatemala, Panama, and the Dominican Republic — using microdata from the World Bank’s High-Frequency Phone Surveys (HFPS, n=16,527). To address endogeneity, remittance receipt is instrumented through the interaction between pre-pandemic migration intensity from census data and a composite household wealth index derived from principal component analysis. The results show that remittances significantly reduce the likelihood of experiencing food insecurity, particularly in countries where migration networks are well-established. However, households reporting lower (or stopped) remittance inflows during the pandemic are more likely to face food insecurity, highlighting both the fragility and the importance of this income source during global shocks. The findings suggest that remittances serve as an informal safety net but provide limited resilience when external shocks disrupt the ‘normal’ flow.