THE MACROECONOMIC DETERMINANTS OF HOUSEHOLD WELFARE IN SADC: A QUANTILE REGRESSION APPROACH

Strike Mbulawa

Abstract


 

The study focuses on household welfare in the context of Southern Africa Development Community (SADC) against the background that few studies have addressed this issue despite its importance in policy making. Past studies have failed to explain the impact of remittances on household welfare throughout the different distribu-tions. The study aimed to: (1) establish the key determinants of household welfare and explain how they behave across different quantiles (2) discuss the substitutability between remittances and FDI as drivers of household welfare. The study employs panel data (1975-2014), conditional quantile regression and panel least squares approach. Findings support altruistic motives in explaining workers’ and recipients’ behavior at first while the portfolio approach dominates their behavior at higher levels of the distribution. The study confirms the trade openness led welfare hypothesis and the remittance led welfare hypothesis. The flow of remittances and FDI are substitutes when considered as sources of improved welfare. The paper provides policy implications for improving household welfare.


Keywords


Household welfare; SADC; Remittances; FDI; Quantile regression

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References


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