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

Edward Asiedu,Nurokinan Chimbar

doi:10.1111/rode.12668

Edward Asiedu, Nurokinan Chimbar

Open Access

https://doi.org/10.1111/rode.12668

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Abstract

AbstractIn 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.

Highlights

Migration within and from and remittances in and into sub-Saharan Africa have increased considerably in the past few decades
The estimation results for the first stage and the main equation are presented in columns 1b and 1a of Table 5, respectively, for the labor force participation model
The results of the first-stage IV probit model suggest that male individuals are less likely to report that their households do receive remittances compared with female individuals

Summary

| INTRODUCTION

Migration within and from and remittances in and into sub-Saharan Africa have increased considerably in the past few decades (see Ratha, 2005; Teye et al, 2019). About 6.8% of the households reported having a returned internal migrant and 0.7% had returned international migrants within the 3-year period This buttresses our point that any analyses of the impact of remittances on household left behind in sub-Saharan Africa and Ghana should be holistic, considering the impact of total migration and remittances. We draw on the cross-sectional data from the Ghana Living Standards Survey (GLSS, 2012/2013) to explore the impact of remittances on the labor participation behavior of household members left behind. It guides development practitioners interested in reducing rural poverty to explore ways to harness remittances for employment creation and labor participation.

| LITERATURE REVIEW

| RESULTS

| DISCUSSION AND CONCLUSION