Abstract
This paper examines the effect of labor migration on education investment in migrant-sending countries in negative-selection circumstances. Negative-selection migration has two conflicting effects. On one hand, individuals in prospect of future migration lose education incentives (the prospect effect). On the other hand, parental migration provides remittances and facilitates education investment (the remittance effect). Whether migration overall encourages or discourages education investment is intuitively ambiguous. The theoretical results present two scenarios. In the optimistic scenario, the remittance effect plays the main role and migration overall encourages education investment. In the pessimistic scenario, the prospect effect plays the main role and migration overall reduces education investment. The pessimistic scenario is likely to occur if education quality is low and the cost to obtain large human capital is large, which seemingly match the circumstances in developing countries. The empirical investigation uses data from Tajikistan and takes advantage of a rapid and exogenous increase of migration in that country. The results match the pessimistic scenario: Migration overall reduces education investment. Although parental migration raises education investment, the prospect effect reduces it regardless of parental migration status.
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