Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298713 
Year of Publication: 
2022
Citation: 
[Journal:] IZA Journal of Development and Migration [ISSN:] 2520-1786 [Volume:] 13 [Issue:] 1 [Article No.:] 4 [Year:] 2022 [Pages:] 1-50
Publisher: 
Sciendo, Warsaw
Abstract: 
The impact of remittances on households left behind by migration is ambiguous a priori due to competing income and substitution effects. We offer new evidence on the effect of remittances on household investment decisions. We enrich our analysis using microdata from five sub-Saharan African countries, different investment alternatives, and different remittance sources. We use a recursive bivariate probit model and imperfect instrumental variable approaches to account for endogeneity concerns. We find that remittances increase the likelihood of human, physical, and social capital investment in most of our sample countries. We also find that remittance sources have a notable influence on household investment decisions. Finally, we explore three potential mechanisms: income effect, substitution effect, and migration expectations. We find that the income effect of remittances mainly drives the positive effect on capital investment. However, we also find evidence of substitution effect by left-behind household members and migration expectations in some countries. We contribute to the ongoing debate on the effect of remittances on capital investments, and our results shed light on the heterogeneous effect of remittance in the literature.
Subjects: 
remittances
investments
sub-Saharan Africa
physical capital
human capital
social capital
JEL: 
F24
F22
O15
O24
J61
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.