A recent literature examines what impact remittances have on investments in human capital in the source country, particularly in health and schooling. The broad consensus within the literature is that migrant remittances can lead to human capital formation in the country of origin. However, measuring the impact of remittances on health or education is challenging, because migration itself is a choice variable that may reflect household health and education priorities Further migrant remittances may be directed towards multiple recipients and tracking their end uses is complicated and difficult.
Edwards and Ureta (2003) find that income from remittances has a much larger positive impact on school retention rates than does income from other sources. In urban areas, the average level of remittances lowers the hazard that a child will drop out of elementary school by 54 percent. Based on household level evidence from the Philippines, Yang and Martinez (2006) found that a 10 percent increase in remittance flows led to a 1.7 percent increase in school attendance and a 0.35 hour decline in child labor in a week per household. Supporting these conclusions is the study by Gubert (2007) in Mali, which finds that finds that remittances alleviate poverty and enable investment in education.
Considering the impact of both remittances and parental migration, Jampaklay’s (2006) analysis of a large, longitudinal sample of Thai children found that parental absence countered the positive impact of remittances on school attendance. The short-term absence of the father negated the positive impact of remittances and the long-term absence of the mother was even more negative. The Jampaklay conclusions about the effects of parental absence correspond with those of other studies that do not specifically consider remittances but which conclude that parental absence (particularly of the mother) deprives the child of bonding and role-modeling that underlie success in school and beyond.
Other studies have examined the impact of remittances on child health outcomes. Kanaiupuni and Donato (1999) investigate the impact of remittances on child health, focusing on infant survival. With a sample of 150-200 households in 25 communities from the Mexican Migration Project, they examine how village migration patterns affect infant survival outcomes in sending communities. The authors’ main hypothesis is that migration is a cumulative process with varying health effects at different stages.. Their results suggest infant mortality rates are high in communities experiencing intense U.S. migration but that over time increases of migration from a community and in the inflow of migrants’ remittances then leads to a reduction of infant mortality rates. The authors conclude that migration is likely to yield health benefits to all infants over time. The results do not deal with the selectivity of the migration process.
Mckenzie and Hildenbrandt (2005) investigate the impact of international migration and remittances on child health outcomes in rural Mexico using a 1997 nationally representative demographic survey. To correct for the endogeneity of migration status, the authors use historic migration networks—1920s, state-level migration rates in Mexico—as instruments for current migration stocks. The authors find that children in migrant households have lower rates of infant mortality and higher birth-weights than those in non-migrant households. One contribution of this study is that the authors also explore the channels through which migration may affect health outcomes and find evidence that migration raises health knowledge as well as wealth, thus providing a broader view of the health consequences of migration than is typically offered by the existing literature.
Topic 18 – Articles
This paper uses a nationally-representative household survey from El Salvador (1997 EHPM) to analyze the impact of international remittances on school retention rates in El Salvador. The authors use a Cox proportional hazard model to compare how two types of income, income from remittances and income from other sources, affect school attendance. Results suggest that income from remittances has a much larger impact on school retention rates than income from other sources. In urban areas, the average level of remittances lowers the hazard that a child will drop out of elementary school by 54 percent.
Gubert, Flore. 2007. Migration and Development: Mixed Evidence from Western Mali. Development 50(4): 94–100. (Publisher Link)
This study is based on a spatially-clustered non-random sample of 305 rural households in eight villages in Mali in 1997. The author finds that remittances serve an insurance function, protecting households against situations of transitory economic hardship that has been shown to have strong detrimental effects on children’s education and health outcomes. Since poverty is one of the major reasons for children being taken out of school, remittances encourage human capital formation. The author goes on to discuss how migrant-driven projects in rural areas tend to be non-productive in terms of income generation (e.g., investments in real estate, transportation, or hotels). Most projects are abandoned before they have time to generate any notable spill-over effects on village economies. In these villages, poor weather conditions and inadequate road infrastructure are strong factors that offer no incentive to reinvest in the local economy.
Jampaklay, Aree. 2006. Parental Absence and Children’s School Enrolment: Evidence from a Longitudinal Study in Kanchanaburi, Thailand. Asian Population Studies 2(1): 93-110. (Publisher Link)
This study employs a comprehensive, longitudinal (panel) data-set of 2576 children, 13-18 years old in 2000, in which their enrollment in secondary school in 2003 was predicted from a series of key independent variables for 2000-2002, including parental absence and receipt of remittances, in addition to controls for gender, household assets, and education of the household head. Parental migration was principally internal, to other parts of the Kanchanaburi province or elsewhere in Thailand. The results from a multivariate odds-ratio analysis establish, in line with previous studies, that receipt of remittances significantly improves enrollment of children who stay in their villages, but also encourages and enables students who do not enroll to seek employment elsewhere. An even more significant and inverse effect occurs, however, owing to parental absence, particularly when it is the mother and when she has been away two years or more. The study suggests the contrasting roles of remittances—directly providing the economic resources for education of the children left behind, but indirectly, in certain situations, denying children the parental guidance needed for staying and excelling in school.
This paper uses a sample of 150-200 households and 25 communities from the Mexican Migration Project to examine how village migration patterns affect infant survival outcomes in sending communities in Mexico. The authors’ main hypothesis is that migration is a cumulative process with varying health effects at different stages of its progression. Their results suggest higher rates of infant mortality in communities experiencing intense U.S. migration. However, their findings also suggest that the impact of migration on infant survival changes over time due to inflow of migrants’ remittances and the institutionalization of migration. Mortality risks are low when remittances are high and decrease as migration experience increases in a community. The authors conclude that migration is likely to yield eventual health benefits to all infants over time. The results do not deal with the selectivity of the migration process.
McKenzie, David J., and Nicole Hildebrandt. 2005. The Effects of Migration on Child Health in Mexico. Economia 6 (1):257–289. (Publisher Link)
This paper investigates the impact of international migration on child health outcomes in rural Mexico using a 1997 nationally representative demographic survey. To correct for the endogeneity of migration status, the authors use historic migration networks—1920s state-level migration rates in Mexico—as instruments for current migration stocks. The authors find that children in migrant households have lower rates of infant mortality and higher birth-weights. One contribution of this study is that the authors also explore the channels through which migration may affect health outcomes and find evidence that migration raises health knowledge in addition to its direct effect on wealth. These results provide a broader view of the health consequences of migration than is offered by the existing literature.
Yang, Dean, and Claudia Martinez. 2006. Remittances and Poverty in Migrants’ Home Areas: Evidence from the Philippines. In International Migration, Remittances, and the Brain Drain, edited by C. O. a. M. Schiff. Washington, DC: World Bank.
This paper exploits a unique natural experiment that helps identify the causal impact of remittances on poverty in migrants’ origin households and in remittance-receiving areas. The authors relate exogenous shocks (sudden changes in exchange rates due to the 1997 Asian financial crisis) to the remittance receipts of Philippine households. They find that the appreciation of a migrant’s currency against the Philippine peso led to increases in the origin household remittance receipts, and reductions in poverty in migrants’ origin households. The authors also find evidence of spillovers to households without migrant members, focusing on cross-regional variation in the mean exchange rate shock experienced by the region’s migrants. In regions with more favorable mean exchange rate shocks, aggregate poverty rates declined even in households without migrant members. However, they do not find strong evidence of effects on regional inequality.