Migrants’ remittances and education: evidence from Albania

Type Journal Article
Title Migrants’ remittances and education: evidence from Albania
Publication (Day/Month/Year) 2011
URL http://www.econ-jobs.com/research/17378-Migrants--remittances-and-education--evidence-from-Albania.p​df
Do households that receive remittance income from abroad spend more money on their children’s education? Are their children more likely to be enrolled in school? These questions will be tested using household and individual data from the 2005 Living Standards Measurement Study (LSMS) study conducted by the World Bank and INSTAT (Albanian National Statistics Institute). This paper explores how remittances affect a household’s propensity to invest in education. Also, by using various gender variables and separating effects by gender, light will be shed on how these decisions differ based on gender in this rapidly-developing European country. It will be necessary to use instrumental estimation procedures to account for unobservable variables that may affect both a household’s probability of receiving remittance income and its household decision regarding education spending or decision to enroll children in school. The plausibly exogenous instruments used are the regional percentage of remittance-receiving households and the number of male household members. Results suggest that there is a causal effect of receiving remittances on these decisions because remittance-receiving households face a weaker incentive to invest in their children’s human capital and don’t value education as highly as those households that do not receive remittances. This is because children living in remittance-receiving households are more likely to migrate themselves, and thus attain only enough education as they need to be successful migrant workers. This rearrangement of household expenditures results in more income being diverted to durables and housing, a result in line with other work done on the subject.

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