Are Households Utilizing Remittance on Quality Education? An Empirical Study from Nepal

Are households in Nepal investing remittance income to improve quality of education of their children? This paper investigates the question using data from the third round of Nepal Living Standard Survey (NLSS). Quality education in this paper is measured as private school enrollment, hiring of private tutor, expenditure in private tutoring, and expenditure in school tuition. Measuring causal effect of remittance on these variables is challenging because of two separate self-selection issues namely: self-selection of household into migration and decision of migrants to remit. These challenges are addressed by restricting analysis to households with migrants and using instrumental variable (IV) regression. Controlling for hosts of observable household level characteristic, child level characteristic and using region fixed effect there is no evidence of causal effect of remittance on private school enrollment and hiring of private tutor. However, there is positive minimal impact of remittance on remittance on expenditure in private tuition and on expenditure in school tuition.