Do Remittances Mitigate COVID-19 Employment Shock on Food Insecurity? Evidence from Nigeria

Abstract

This paper assesses the mitigating role of remittances during the adverse COVID-19 employment shock on Nigeria’s food insecurity. Based on pre-COVID-19 and post-COVID-19 surveys, we use a difference-in-difference approach while controlling for time and household fixed effects. Results indicate that remittances mitigate the negative consequences of COVID-19 employment shocks, especially in the short run. We find that 100 of the deterioration in food insecurity, owing to the shock, is offset by the remittances received. While the adverse effects of the shock persist over time, this mitigation effect appears to be effective only at the early stages of the pandemic.Furthermore, the mitigation effect of remittances is heterogeneous regarding the origin of remittances, residence area, and poverty status. The mitigation effect of remittances is higher for remittances from abroad than for domestic ones. We also find a higher mitigating effect of remittances in rural areas and for non-poor households. Finally, our results shed light on the capital channel as a crucial mechanism explaining the attenuating of remittances. Notably, our findings suggest that formal financial inclusion, capital ownership like livestock, or rental earnings, amplify the mitigating effect of remittances.