Households receiving remittances spend more on education

What effect is migration likely to have on education? Remittances can provide the financial means for households to invest in their children's education. The literature generally finds that in households that receive remittances, school dropout rates fall and the years of schooling increase (Cox-Edwards and Ureta, 2003; Hanson and Woodruff, 2003; Yang, 2008). Households that receive remittances also tend to spend more on education (Adams, 2005; Murata, 2011). At the same time, the emigration of household members may negatively affect child and youth education enrolment rates and increase school dropouts if they are needed to do more housework, farm work or work outside the household. The most relevant previous study of Cambodia found that children in migrant families are more likely to drop out of school, and this effect tends to be stronger for girls (Hing et al., 2014). One explanation is that gender inequalities in education still persist in Cambodia.

As noted above, primary school attendance rates in the IPPMD sample are high. However, among the children not attending school, those in households without migrants are more likely to be out of school because the household cannot afford school (29% versus 25%). This pattern might be linked to remittances as the difference is even larger when comparing when comparing households receiving and not receiving remittances (30% among children in households without remittances compared to 24% in households with remittances). Although households' schooling costs have fallen in Cambodia following the introduction of the Priority Action Program (PAP) in 2000, they remain substantial. These costs mainly include pocket money, transport and supplementary tutoring, and increase rapidly with grade (World Bank, 2005). According to the NGO Education Partnership, parents' school-related costs amount to KHR 443 800 (uSD 108) per child, or 8.7% of the family's annual income (NEP, 2007).6 Fees increase as students progress from grade to grade (an estimated uSD 60 for grades 1-3, uSD 90 for grades 4-6 and uSD 158 for grades 7-9).

The IPPMD data suggest that households receiving remittances spend similar amounts on education than households not receiving remittances. The former spend on average KHR 850 000 (uSD 210) a year on education, while households not receiving remittances spend slightly more, at KHR 900 000 (uSD 223) a year on average. The share of the household annual budget spent on education is around 6.7% for both household groups (6.6% for households without remittances and 6.7% for those with remittances).

However, more in-depth regression analysis controlling for other individual and household factors shows a positive and significant link between remittances and educational expenditures, in absolute as well as in relative terms (Box 4.3). The results suggest that remittances allow households to spend more on educating their children. These results are also in line with another Cambodia study, which shows that remittances increase educational expenditures (Hing and Sry, forthcoming).

The results in Box 4.3 also show a negative link between emigration and educational expenditures (when simultaneously controlling for household receiving remittances), potentially because children in emigrant households may have to take on more housework or work outside the home.

The prospect of future emigration could also influence school attendance rates. The IPPMD data show that youth who are planning to emigrate are less likely to attend school than those who do not plan to emigrate (Figure 4.5). This may be explained by low returns to education both at home and abroad. Low returns to education in Cambodia, especially in higher education, reduce the incentives to attain education beyond basic levels (OECD, 2013). In addition, if returns to domestic education are low in the country of destination, the prospect of future emigration may also lower the incentive to invest in education. Similar results have been found for rural households in Mexico (Mckenzie and Rapoport, 2006).

Box 4.3. The links between migration, remittances and education expenditures

A regression framework was developed to estimate the effect of migration and remittances on education expenditures using the following equation:

where the dependent variables Ln(edu _ exphh) in equation (6) and edu exphh in equation (7)

total exphh

represent household educational expenditures measured in absolute (logged) values or as share of total household yearly budget respectively; remithh represents a binary variable for households receiving remittances, where “1” denotes a household receiving remittances and “0” if not; while emighh takes on value “1” if the household has at least one emigrant and “0” if not; controlshh are a set of observed household characteristics influencing the outcome.3 Sr represents regional fixed effects and shh is the randomly distributed error term.

Table 4.4. Households receiving remittances spend more on education

Dependent variable: Educational expenditures (values and share of household budget) Main variables of interest: Amount of remittances, having an emigrant Type of model: OLS

Sample: All households with children in school age (6-14)

Variables of interest

Dependent variable

(1)

(2)

Educational expenditure (log amounts)

Educational expenditure (share)

Household receives remittances

0.196*

0.012*

(0.103)

(0.006)

Household has at least one emigrant

-0.251**

-0.019***

(0.102)

(0.006)

Number of observations

1 029

1 099

Note: Results that are statistically significant are indicated as follows: ***: 99%, **: 95%, *: 90%. Standard errors are in parentheses.

a. 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) and the number of youth (15-17 years old) in the household, a dummy for urban location, and finally an asset index (based on principal component analysis) that aims to capture the wealth of the household. In addition, a variable indicating whether the household has a migrant or not has been added.

Figure 4.5. Youth planning to emigrate are much less likely to attend school

Share of youth (aged 15-22) attending school, by intentions to emigrate

Note: Statistical significance calculated using a chi-squared test is indicated as follows: ***: 99%, **: 95%, *: 90%.

Source: Authors’ own work based on IPPMD data.

Sta.tLink^^2 http://dx.doi.org/10.1787/888933470328

 
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