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The Education Motive for Migrant Remittances: Theory and Evidence from India

Listed author(s):
  • Delpierre, Matthieu

    ()

    (IWEPS, Belgium)

  • Dupuy, Arnaud

    ()

    (University of Luxembourg)

  • Tenikue, Michel

    ()

    (LISER (CEPS/INSTEAD))

  • Verheyden, Bertrand

    ()

    (LISER (CEPS/INSTEAD))

This paper analyzes the impact of anticipated old age support, provided by children to parents, on intra-family transfers and education. We highlight an education motive for remittances, according to which migrants have an incentive to invest in their siblings' education via transfers to parents, in order to better share the burden of old age support. Our theory shows that in rich families, selfish parents invest optimally in children education, while in poor families, liquidity constraints are binding and education is fostered by migrant remittances. We test these hypotheses on Indian panel data. Identification is based on within variation in household composition. We find that remittances received from migrants significantly increase with the number of school age children in the household. Retrieving the effects of household characteristics shows that more remittances tend to be sent to poorer and older household heads, confirming the old age support hypothesis.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10772.

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Length: 33 pages
Date of creation: May 2017
Handle: RePEc:iza:izadps:dp10772
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  1. De Arcangelis, Giuseppe & Joxhe, Majlinda & McKenzie, David & Tiongson, Erwin & Yang, Dean, 2015. "Directing remittances to education with soft and hard commitments: Evidence from a lab-in-the-field experiment and new product take-up among Filipino migrants in Rome," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 197-208.
  2. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
  3. Matthieu Delpierre & Bertrand Verheyden, 2014. "Remittances, savings and return migration under uncertainty," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-43, December.
  4. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  5. Adams Jr., Richard H. & Cuecuecha, Alfredo, 2010. "Remittances, Household Expenditure and Investment in Guatemala," World Development, Elsevier, vol. 38(11), pages 1626-1641, November.
  6. Goetghebuer, Tatiana & Platteau, Jean-Philippe, 2010. "Inheritance patterns in migration-prone communities of the Peruvian Highlands," Journal of Development Economics, Elsevier, vol. 93(1), pages 71-87, September.
  7. Lee Lillard & Robert Willis, 1997. "Motives for interqenerational transfers: Evidence from Malaysia," Demography, Springer;Population Association of America (PAA), vol. 34(1), pages 115-134, February.
  8. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-918, October.
  9. Carlos Medina & Lina Cardona, 2010. "The Effects of Remittances on Household Consumption, Education Attendance and Living Standards: the Case of Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 72, pages 11-44.
  10. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
  11. Stark, Oded & Levhari, David, 1982. "On Migration and Risk in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 31(1), pages 191-196, October.
  12. Stark, Oded & Falk, Ita, 1998. "Transfers, Empathy Formation, and Reverse Transfers," American Economic Review, American Economic Association, vol. 88(2), pages 271-276, May.
  13. de la Briere, Benedicte & Sadoulet, Elisabeth & de Janvry, Alain & Lambert, Sylvie, 2002. "The roles of destination, gender, and household composition in explaining remittances: an analysis for the Dominican Sierra," Journal of Development Economics, Elsevier, vol. 68(2), pages 309-328, August.
  14. Alejandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc.
  15. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  16. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
  17. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-476, July.
  18. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
  19. Tobias Stöhr, 2015. "Siblings’ interaction in migration decisions: who provides for the elderly left behind?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(3), pages 593-629, July.
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