Remittances, school quality, and household education expenditures in Nepal

Abstract

A heightened interest in understanding the remitting practices of immigrants and their impact on a variety of economic indicators has emerged as remittances to developing countries have risen substantially over the past decade. If remittances primarily enhance consumption, they may have no lasting impact on economic growth. However, through asset accumulation and human capital investment, remittances may serve as a vehicle for growth. In this paper, we use the 2010 Nepal Living Standards Survey III (NLSS III) to examine how remittances affect household expenditures on human capital investment. Overall, our findings suggest that at the margin, remittances do contribute to human capital investment, but this effect varies substantially by school quality within Nepal. In addition, our results indicate that internal remittances (remittances from household members migrating internally) have a greater impact on education than do external remittances. We posit that this may be due to a higher value placed on Nepali education by internal migrants as compared to the education needed for foreign job opportunities by migrants abroad.JEL codes: J61, I25, F22, F24, H52, O15

The Impact of International Remittances on Education and Health in Bangladesh

“…As for example, Adams and Cuecuecha [14] defined remittances as money or goods transmitted by workers from the migration destination to their origin. Foreign remittances have been studied so far in terms of their contribution to the sending societies like improving consumption levels, paying back loans, getting better education, convalescing health facilities, building homes, funding an investment [15][16][17][18][19][20], or paying utility bills [19] and reducing poverty [21][22]. Positively supplementing the income level of left behinds, remittances are considered a key source to fund education and health care expenditures directly or indirectly [23].…”

Nepal's civil war and the changing sources of income: The role of sectoral shifts and remittances in mitigation and recovery

“…On the other hand, the regions facing intense unrest may catch up as remittances are directed to fuel investment in human and other forms of capital. Bansak and Chezum (); Bansak, Chezum, and Giri (); Chezum, Bansak, and Giri () find evidence that Nepali households use remittances to invest in education as well as in healthcare, but the long‐run consequences are unknown and these studies have found considerable heterogeneity by gender, types of remittances, and the complementaries (or lack thereof) of government services. Thus, ultimately whether these sectoral shifts are temporary or permanent will remain an empirical question.…”

The impact of foreign and domestic remittance types and senders on education outcomes

“…Acharaya and Leon‐Gonzalez () work with two earlier rounds of the Nepal Living Standards Survey to find the effects of migration and remittances vary by parent education levels, with the households of less‐informed (educated) parents gaining the most. Using a later data set, Bansak, Chezum, and Giri () find remittances sent by internal migrants (who perhaps have more contact with family members) are most effective, perhaps as they incorporate school quality in household investment decisions. In contrast, Nepal () uses different instrumental variables and educational outcomes to find international remittances have no significant effect on child education (enrollment) in Nepal.…”

“…Less has been written regarding biases in the friend remittance process per se; in the Nepal () study, one possible concern could be that unmeasured household requests for school donations could lead to both an uptick in remittances and in school enrollment. Previous instrumental variables for both the migration/remittance‐reception processes include historical migration patterns and network effects (Acosta, ; Bansak et al, ; Hanson & Woodruff, ); district‐level civil war intensity (Bansak et al, ); the number of regional Western Union branches (Calero et al, ); exchange rate shocks (Nepal, ); and employment conditions in the receiving country (USA; Amuedo‐Dorantes & Poxo, ; Calero et al, ).…”

“…Contrarily, negative job shocks incentivize people to leave the household to look for work, and, if this effect is not accounted for, the remittance impact on human capital will be negatively biased. It could be that an absent household member incentivizes household members into household labor in lieu of school (Bansak, Chezum, & Giri, ).…”