Domestic Versus International Remittances and Job Creation in Family Firms in Nigeria and Uganda

Research investigating the role of remittances in job creation for both members of recipient and nonrecipient households remains limited. We use a correlated random effects (CRE) estimator to analyze panel household data from Nigeria and Uganda. We find that the source of remittances—domestic or international remittances—does not matter, but their volumes matter in determining the direction of their effects on job creation. Instead, the findings indicate that the effects of remittances on job creation vary by country. In Nigeria, when domestic remittances are a major source of household income, family members are less likely to work in family‐owned firms (FOF) but more likely to hire nonfamily workers. Whereas in Uganda, when either domestic or international remittance income contributes a minority share to the household income, family members are less likely to work in FOF but more likely to do so when remittance income contributes a majority share to the household income. Consequently, a majority share of remittances in household income helps to preserve the employment of nonfamily workers in FOF in Nigeria, while it is the family workers who benefit from employment preservation when remittances dominate household income in Uganda. Policies promoting remittance transfers have the potential to induce job creation in migrants' communities.