Are Remittances More Effective Than Aid To Improve Child Health? An Empirical Assessment using Inter and Intra-Country Data

The objective of the paper is to analyze the respective impact of aid and remittances on human development as measured by infant and child mortality rates and stunting incidence. Panel data on a sample of 98 developing countries, and cross-country quintile-level data on a sample of 47 developing countries are alternatively used. In addition to assessing the extent to which health aid and remittances contribute to reduce child health disparities between countries, the paper addresses two other questions. What is the net effect of migration when the brain drain of health workers is accounted for? What is the effective impact of aid and remittances on intra-country child health disparities? Our results suggest that both remittances and health aid significantly improve child health outcomes. The impact of health aid is non-linear, though, suggesting that aid to the health sector is more effective in the poorest countries. By contrast, medical brain drain, as measured by the expatriation rate of physicians, is found to have a harmful impact on health outcomes. The net impact of migration on human development is therefore mitigated. Medical brain drain is also found to reduce the effectiveness of health aid. Last, remittances seem to be much more effective in improving health outcomes for children belonging to the richest households, whereas neither pro-poor nor anti-poor effect is found for health aid.