Remittances tend to increase educational expenditures

Apart from their potential impact on educational attendance, remittances may also affect educational expenditures. Remittances can improve households' economic situation and allow them to invest in schooling (Cox Edwards and ureta, 2003; Hanson and Woodruff, 2003; Yang, 2008). In Georgia, it is common for parents to hire private tutors, especially to prepare for the unified national exams (uNICEF, 2010).

In the stakeholder interviews in Georgia, education was mentioned as one of the target areas for migrants to spend their remittances. Regression analysis, controlling for other individual and household factors, confirms that remittances are positively associated with educational expenditures (Box 6.3). Receiving higher levels of remittances is linked with higher spending on education both in terms of absolute amounts and as a share of the household budget.

Return migration is not linked to educational expenditures

Return migration may affect demand for education and households' educational investments through the capital, ideas and attitudes that migrants acquire abroad and bring back to the country of origin. However, analysis of the data from Georgia (descriptive and regression analysis controlling for individual and household characteristics) does not find any association between return migration and educational expenditures. Regression analysis controlling for individual and household variables shows no difference in educational expenditures between households with and without return migrants. These findings are in line with other research in Georgia, which found that while remittances are often associated with higher educational outcomes, return migration tends to have a limited impact on educational expenditures or attendance (Chappell et al., 2010).

Box 6.3. The links between remittances and educational expenditures

A regression framework similar to the one described in Box 6.2 was developed to estimate the effect of migration and remittances on educational expenditures using the following equation:

where the dependent variables Ln(edu_exp_hh) and represent households'

educational expenditures measured in absolute (logged) values or as a share of total household annual budget respectively. ln(remit_hh) represents a remittance variable for

Box 6.3. The links between remittances and educational expenditures (cont.)

the amount of remittances received in logged values, while emig_hh takes on value “1” if the household has at least one emigrant and “0” otherwise. controls_hh are a set of observed household characteristics influencing the outcome.¹ S_r represents regional fixed effects and s_hh is the randomly distributed error term.

Table 6.5. Households receiving remittances spend more on education

Notes: Only households with children in school age included. Results that are statistically significant are indicated as follows: ***: 99%, **: 95%, *: 90%. Standard errors are in parentheses and robust to heteroskedasticity. a) Only including households with children of school age.

1. The set of household and individual explanatory variables included in all specifications are the following: household size, household dependency ratio (defined as the number of children and elderly in the household as a share of members in working age), the mean education level of adults in the household, the number of young children (6-14 years old), the number of youth (15-17 years old) and the number of members of tertiary age (18-22) in the household, a dummy for household being located in the capital, and finally an asset index (based on principal component analysis) that aims to capture the wealth of the household.