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Migrant remittances and human capital investments

Author

Listed:
  • Cephas Naanwaab

    () (Department of Economics, North Carolina AT State University, 1601 E. Market Street, Greensboro, NC 27411, USA.)

  • Osei Agyeman Yeboah

    (Department of Agribusiness, Applied Economics and Agriscience Education, North Carolina A&T State University, 1601 E. Market Street, Greensboro, NC 27411, USA.)

Abstract

The objective of thispaper is to investigate the effect of migrant remittances on human capital investments in remittance receiving countries. Prior studies have generally focused on the effects of remittances on consumption and poverty reduction, without much effort given to human capital investments. We seek to fill this void by using a panel dataset comprising 71 developing countries drawn from the World Bank's six regions to analyze the impact of remittance receipts on investment in human capital. The methodology we employ in the analysis is based on a systems approach using three stage least squares regressions to account for endogeneity and/or simultaneity bias of remittances. Contrary to previous findings that remittances only support consumption and yield no social returns, we find that remittances do have a positive and significant effect on two measures of human capital investments, educational spending and healthcare spending.

Suggested Citation

  • Cephas Naanwaab & Osei Agyeman Yeboah, 2013. "Migrant remittances and human capital investments," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 6(2), pages 191-202, December.
  • Handle: RePEc:rse:wpaper:v:6:y:2013:i:2:p:191-202
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    References listed on IDEAS

    as
    1. Gupta, Sanjeev & Pattillo, Catherine A. & Wagh, Smita, 2009. "Effect of Remittances on Poverty and Financial Development in Sub-Saharan Africa," World Development, Elsevier, vol. 37(1), pages 104-115, January.
    2. Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
    3. Borraz Fernando, 2005. "Assessing the Impact of Remittances on Schooling: the Mexican Experience," Global Economy Journal, De Gruyter, vol. 5(1), pages 1-32, April.
    4. Calero, Carla & Bedi, Arjun S. & Sparrow, Robert, 2009. "Remittances, Liquidity Constraints and Human Capital Investments in Ecuador," World Development, Elsevier, vol. 37(6), pages 1143-1154, June.
    5. Dean Yang, 2008. "International Migration, Remittances and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks," Economic Journal, Royal Economic Society, vol. 118(528), pages 591-630, April.
    6. Alassane DRABO & Christian EBEKE, 2010. "Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries," Working Papers 201004, CERDI.
    7. Kristin Göbel, 2013. "Remittances, expenditure patterns, and gender: parametric and semiparametric evidence from Ecuador," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-19, December.
    8. Acosta, Pablo & Calderon, Cesar & Fajnzylber, Pablo & Lopez, Humberto, 2008. "What is the Impact of International Remittances on Poverty and Inequality in Latin America?," World Development, Elsevier, vol. 36(1), pages 89-114, January.
    9. Glytsos, Nicholas P, 1993. "Measuring the Income Effects of Migrant Remittances: A Methodological Approach Applied to Greece," Economic Development and Cultural Change, University of Chicago Press, vol. 42(1), pages 131-168, October.
    10. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December.
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    More about this item

    Keywords

    migrant remittances; health spending; educational investment;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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