Abstract
We exploit the size of the 2010 Ecuadorian Census to estimate the effect of remittances on secondary school enrollment across four key dimensions: gender, household wealth, rural vs. urban, and family migration status. Using a bivariate probit model that accounts for both endogeneity and non-linearity issues, we find both positive and negative effects of remittances on the likelihood of schooling. The strongest positive effects are for poorer, urban males, while the negative effects are for rural females. For children in wealthier households, the effects of remittances are either negative or non-significant. This suggests that the positive income effects of remittances may be offset by the negative effects of a missing parent due to migration, more visible in wealthier families where financial constraints may not be as binding. We find further support for this by estimating the effects of remittances conditional on migration status. Our results show positive effects on schooling for non-migrant households that receive remittances and no effects for children living in households where at least one parent has migrated. The sharp contrasts within and across groups, while using the same data and econometric specifications, help explain the lack of consensus in the literature.
Highlights
International remittances continue to be a major source of income in developing countries
The effects of remittances on children’s schooling are of particular interest, as human capital accumulation may break the intergenerational transmission of poverty through higher future income, especially in the case of Ecuador where large labor returns to schooling have been found (Bertoli et al 2011)
7 Conclusions We exploit the full dimension of the 2010 Ecuadorian Population and Housing Census database to identify the effects of remittances on children’s education
Summary
International remittances continue to be a major source of income in developing countries. Some studies find evidence for a higher likelihood of schooling in the presence of migration (Shrestha 2017; Theoharides: Manila to Malaysia, Quezon to Qatar: international migration and its effects on origin-country human capital, forthcoming) and remittances (Alcaraz et al 2012; Calero et al 2009; Göbel 2013) They argue that the positive effects may be driven by the additional income, wage premiums for migrants, contribution to household capital accumulation, and higher propensities of migrant families to invest in education. While using the same data and econometric specifications, our findings vary greatly across these subgroups, and it is this variation that seems to explain the heterogeneity of results in the literature We find both positive and negative effects of remittances on education, depending on the particular group being studied. Our results show positive effects on schooling for non-migrant households that receive remittances and no effects for children living in households where at least one parent has migrated
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