Labour effects of foreign and domestic remittances – evidence from Pakistan

Remittances are playing an increasingly important role in the economies of developing countries. In this paper, we study the effects of these flows on Pakistan’s labour market. We employ the 2007–2008 Household Integrated Economic Survey and Probit as well as Propensity Score Matching techniques to examine the impact on labour participation, quantity of work and activities of working as well as non-active members of remittance-receiving households. We find that both foreign and domestic remittances tend to lower labour supply of the recipient households. This impact is higher among women and among the young. The impact is more pronounced in the rural areas. In addition, foreign remittances increase the likelihood of household members attending middle school. We also examine the quantity of labour supplied by the remittance-recipient households. Results show little difference in the number of months and days worked between the households receiving and not receiving remittances. Furthermore, we find that the likelihood of being self-employed and cultivating one’s own land is higher among remittance recipients. In sum, our analysis highlights a higher role of foreign remittances in the labour market as compared to internal remittances.     

Remittances channels and the physical growth of Honduran children

Ensuring the availability of food and other resources for young children is important for sustaining physical growth. We examine the role of remittances and its associated implications in determining heights and weights of 4459 children aged 0–5 years in Honduras in 2004. To address the endogeneity problem with household remittance receipt, we take advantage of the timing of Hurricane Mitch in 1998 to construct instrumental variables that are exogenously related to migration decisions made before children included in the later survey were conceived. We find that children are significantly taller and heavier for their age and gender in households receiving remittances. Further investigation of household spending indicates significant changes in food purchases and dietary diversity. Households receiving remittances are more likely to include fish, fruits, and meats in their diets. Additional findings also indicate that households receiving remittances spend absolutely more on food, health care, education, and durable goods. Overall, the findings provide strong evidence that remittances change household consumption and increase children’s body sizes.     

Impact of remittances on male and female labor force participation patterns in Africa: Quasi‐experimental evidence from Ghana

In this paper, we examine how remittances, an outcome of labor mobility, affect labor market activities in Ghana using detailed household and individual‐level data. This is important, considering the extensive literature that has documented the remittance–poverty reduction nexus. First, we find a strong negative association between household remittance‐receiving status and individual labor supply decisions using instrumental variable estimation techniques. Second, we find the depressing effect of remittances on labor supply decisions to be much stronger in rural areas. Rural women who reside in remittance‐receiving households are less likely to be in the labor force compared with those who do not reside in such households. Remittances have very little impact on labor supply decisions in urban areas. Our findings support that remittances can exacerbate long‐term poverty reduction in rural areas through lower labor force participation, and as such rural‐based and gender‐based interventions may be needed to help redirect remittance income.     

Remittances and household expenditure behaviour: Evidence from Senegal1

We use different econometric techniques, from propensity score matching to multinomial treatment methods, to assess the impact of internal and external remittances on several household budget shares in Senegal. When only considering the average impact of remittances on the household expenditure behaviour, we find an overall productive use of remittances. However, the impact of remittances disappears when the marginal spending behaviour is considered, i.e., households do not show a different consumption pattern with respect to their remittance status. The marginal spending behaviour therefore suggests that, in the decision on how to allocate expenditure, remittances are treated just as any other source of income.     

The effects of international remittances on expenditure patterns of the left‐behind households in Sub‐Saharan Africa

This article explores the effects of international remittances on the expenditure patterns of households in Sub‐Saharan Africa (SSA). This article focuses on five countries in SSA, which are some of the destinations that account for the highest receipt of international remittances. We analyze both aggregate and distributional effects of international remittances on expenditure patterns of households. To investigate the distributional effect of international remittances, we adopt the instrumental variable quantile (IV‐quantile) regression framework that allows us to simultaneously address the endogeneity of international remittances and possible heterogeneity in the impact of international remittances on households’ expenditure patterns. We instrument for international remittances by using the economic conditions in migrants’ countries as an instrument for international remittances. Our results show that the receipt of international remittances increases expenditures on food, durables, education, and health. Using the IV‐quantile regression, we find the effects of international remittances on household expenditure on food, durables, education, and health increase across the different expenditure quantiles.     

Household poverty and inequality: the implication of migrants’ remittances in Nigeria

This article examines the nature of migrant remittances and the amount by which income poverty and inequality will be reduced given migrants’ remittances. We used the living standard survey (NLSS) data set produced by the government of Nigeria to help track poverty reduction progress. The unit of analysis was the household, upon which information on remittances was analysed. From the results, 94% of households received remittances through internal channels while less than 5% received them through international channels. Remittances alleviated poverty head count by 20% and helped to equalize household income inequality by 25%.     

Impact of remittances on household health care expenditure: Evidence from the Nepal Living Standards Survey

This paper examines the effect of remittance inflows on health care expenditure in Nepal using the Nepal Living Standards Survey 2010–2011. Using the recursive three‐stage least square regression method, the propensity score matching method, and the Oaxaca–Blinder decomposition method, we find a positive and significant effect of remittances on health care expenditure. In particular, our analysis shows a 0.099% increase in health care expenditure for every 1% increase in overall remittances. This effect increases to 0.189% for earned remittances (remittances received from a household member). We also find that remittance‐receiving households with at least one migrant family member have different health care spending behavior than those with no migrant members.     

Effects of remittances on financial inclusion gender gap in developing countries

Remittances have a wide range of benefits to households and the economy at large. Evidence show that women are the major recipients of remittances in developing countries, consequently this may have the potential of reducing the gender gap in economic outcomes. This study examines the impact of remittances on gender gap in financial inclusion in developing countries. The dataset for the study was built from multiple sources. Based on data availability, the study covers 102 developing countries for three years, namely 2011, 2014 and 2017. The study employs fixed effects instrumental variable technique using the economic conditions of the top five remittance sending countries (proxied by their GDP per capita and employment rate) as instruments. For robustness purpose different measurements of remittances are used in the analysis. Though the study does not provide evidence that remittances impact the overall inequality in access to financial services, the results show that remittances significantly reduce the gender gap in financial inclusion in developing countries. Based on these findings, the study makes appropriate policy recommendations.     

Intrahousehold moral hazard frictions and household poverty traps in rural India

We empirically study the role of assets held by women in the creation of household wealth using data from rural India. We design a streamlined model of intrahousehold project funding where moral hazard frictions between spouses and women's asset control are the main ingredients. As predicted by the model, the data show that household asset accumulation depends on women's asset control in a non-monotonic way. Results indicate no presence of multiple equilibrium poverty traps, but do show that exogenous negative shocks will trigger assets aggregation within households where both spouses are present. This resilience mechanism is, however, not found in female headed household as these households have a monotonic relationship between women's wealth control and asset creation. We thus argue that policies to support women's empowerment need to distinguish women based on their individual wealth levels and headship status to enhance household well-being in remote Indian communities.     

Destined to Receive: The Impact of Remittances on Household Decisions in Armenia

The paper uses data from Armenia to test the implications of remittance flows on behavior of receiving households. We find that remittance‐receiving households work fewer hours and spend less on the education of their children. While saving more, these households are not leveraging their savings to borrow from the banking system to expand their business activities. This evidence suggests that the benefits of remittances might be overstated and emphasizes the importance of measuring their impact in a general‐ rather than a partial‐equilibrium context.     

Comparative effects of migrants’ remittances on composition of recipient household income in two small,island economies

We use unique household survey data from Fiji and Tonga to estimate and compare the combined impact of migration and remittances on the composition of household income. A two-step methodology is followed employing a migration prediction model followed by the estimation of a Three Stage Least Squares (3SLS) remittances and income equation system. We find that remittances contribute to growth in productive capital and entrepreneurial activity in the longer-established migrant economy, but have yet to impact on business activity in the more recently remittances-oriented economy, despite it having a more developed, market economy. In the latter case, remittances seem more linked to supporting consumption through supplementing low wage income. These findings suggest that the duration and intensity of remittance-driven migration, and the structure of economic activity within a community are important in understanding the influences of migration and remittances on household resource allocation and production decisions.     

Consumption Effects of Foreign Remittances in Jamaica

The term remittances refers to proceeds from the migration of labor that are sent to aid individuals remaining in the migrants’ home communities. In this paper, we investigate whether remittances alter the consumption pattern of recipient households in Jamaica. We present results from an Engel curve estimation specifically using the Working (1943) approach and a two-part fractional response model with instrumental variables to account for selection bias and endogeneity of remittances. The dependent variables are a subsample of the categories of consumption as defined in the Jamaican Survey of Living Conditions and include expenditures on food, schooling, health, gambling, alcohol and donations. We find that receipt of remittances significantly alters the recipient households’ expenditure allocations relative to other sources of income, although this effect occurs more through the participation decision. Overall, total effects of remittances are largest in the areas of luxury expenditures and home production, and to a lesser extent for education and grocery store purchases. These findings have significant implications for those remitting, those receiving, and governments looking to understand this large flow and less documented source of income.     

Remittances and banking sector breadth and depth: Evidence from Mexico

Despite the importance of remittances to developing countries, their impact on banking sector breadth and depth in recipient countries has been largely unexplored. We examine this topic using municipality-level data on the fraction of households receiving remittances and on measures of banking breadth and depth for Mexico. We find that remittances are strongly associated with greater banking breadth and depth, increasing the number of branches and accounts per capita and the amount of deposits to GDP. These effects are significant both statistically and economically, and are robust to the potential endogeneity of remittances, inclusion of a wide range of controls and even municipal fixed effects specifications using an alternative panel data set from a sample of municipalities.     

Remittances and the human capital of children: New evidence from Kyrgyzstan during revolution and financial crisis, 2005–2009

We analyze the effect of the receipt of remittances on the education and health of children in Kyrgyzstan during a volatile period of their recent history, 2005–2009. The country experienced revolution in 2005 and the global financial crisis beginning in 2008. Both events impact human capital investment, and the changes vary by region of the country. We use fixed effects estimation and fixed effects, instrumental variables estimation to isolate the effects of remittances and other events on human capital. We find that boys aged 14–18 in remittances’ receiving households are less likely to be enrolled in school than other children. We also find that girls in remittances’ receiving households are more likely to be malnourished (thin). Both effects are relatively small. Remittances do not improve the human capital of children left behind. However, we do find an overall positive improvement in school enrollment among young children between 2005 and 2009 but a negative trend in enrollment among older boys and girls. Nutrition improves over time. Regional differences are apparent in these trends in nutrition and education.     

No country for young men: International migration and left‐behind children in Tajikistan

This paper investigates the effects of international migration on the schooling and labour outcomes of left‐behind children in rural Tajikistan. Using three‐wave panel survey data, I rely on an instrumental variable strategy to address the non‐random selection into migration. I identify important and gender‐differenced schooling and labour supply responses. My findings suggest that boys living in migrant households are less likely to lag behind at school or work. At the intensive margin, they also report fewer hours of work per week. On the other hand, left‐behind teenage females undertake a higher number of domestic chores. They appear to marry earlier as well. The migration impact on boys appears to be driven by remittances and the improved financial situation of households. The absence of any positive influence on the education of left‐behind girls is likely to be explained by Tajikistan's cultural norms and institutions.     

A panel data analysis of the growth effects of remittances

Many development economists believe that remittances by the migrant workers are an important source of funds for long run growth. Therefore, recent studies have investigated the growth effects remittances in the recipient countries but reached different conclusions. This paper analyses the strength of these effects with a common data set with alternative specifications and estimation methods. Our results show that the direct growth effects of remittances are insignificant. However, remittances may have small indirect growth effects.     

Remittances and investment nexus in Bangladesh: an ARDL bounds testing approach

Bangladesh is the 8th largest remittance recipient country in the world and one of the heavily dependent (11 % of GDP) countries of remittances. Despite its importance in policy making in developing countries like Bangladesh, there is absence of any study regarding the effect of remittances on the level of investment. In an attempt to fill the gap, we examine the cointegrating property and stability of the relationship among these variables using the ARDL bounds testing approach combined with CUSUM and CUSUMSQ tests. Our findings show that both remittances and trade openness positively and significantly influence the level of investment in Bangladesh, meaning that contrary to most conclusions found in the literature, migrant remittances in developing countries are not entirely spent in basic consumption needs. We also find that foreign aid has very little and insignificant impact on investment. Finally, we find long-run unidirectional causal relationship running from remittances to investment indicating that favorable policies to increase the flow of remittance will promote investment in Bangladesh.     

Migration,remittances, and inequality: estimating the net effects of migration on income distribution

"This paper examines the net effects of migration and remittances on income distribution. Potential home earnings of migrants are imputed, as are the earnings of non-migrants in migrant households, in order to construct no-migration counterfactuals to compare with the observed income distribution including remittances. The earnings functions used to impute migrant home earnings are estimated from observations on non-migrants in a selection-corrected estimation framework which incorporates migration choice and labor-force participation decisions. For a sample of households in Bluefields, Nicaragua, migration and remittances increase income inequality when compared with the no-migration counterfactual."     

Household Decisions and Equilibrium Efficiency

A general equilibrium model is introduced where a household may consist of several members, each with individual preferences and/or resources. When households obey collective rationality, certain intrahousehold externalities can be fully internalized by the respective households so that competitive exchange among households is efficient. As a rule, however, such intrahousehold externalities are not fully internalized by individual household members acting in their personal interest so that competitive exchange among such individuals is only efficient in exceptional cases.     

Impact of Education on Household Welfare in Nigeria

Human capital development, especially higher educational attainment, attaches high premium to its expected economic benefits, in form of better welfare. This study investigates the effect of educational attainment of household head on two indicators of household welfare, namely labour market earnings and household per capita total expenditure on food and non-food items in Nigeria. The study uses the Double Hurdle (DH) model and Quantile Regression (QR) to address these objectives. The empirical results show that returns to schooling are substantially higher at the tertiary level of education compared with primary, secondary, and postgraduate levels of education in Nigeria. Furthermore, additional years of tertiary education attainment by household heads was found to increase household per capita total expenditure more than additional years of primary, secondary and postgraduate education. The implication of these findings is that the improvements in economic welfare of households in Nigerian is driven more by the attainment of tertiary education by household heads, relative to other levels of education.