The impacts of remittances on child labour and schooling

Migration has often been at the centre of public debate and is today at the centre of the political agendas in both Europe and the US. Remittances (i.e. the money sent back home by migrants) are a crucial aspect of migration. They have risen enormously in recent decades, becoming a key source of external income for households of many developing countries. Remittances tend to increase the well-being of receivers by improving consumption, encouraging investments, and paying for children’s education. In a paper published this month by the International Migration Review (IMR), our Michele Binci (senior consultant in the Monitoring and Evaluation team) and Professor Gianna Claudia Giannelli (University of Florence) focus on this last point, by investigating the impact of remittances on schooling and child labour of children left behind by migrant parents.

Remittances and child labour

Using longitudinal data from Vietnam, this paper contributes to the literature on the effects of remittances on household decisions regarding consumption and investment in human capital. From a theoretical point of view, remittances can be treated as an additional income source for the household. Therefore, if parents’ decision to rely on child labour is due to the necessity of meeting the most basic needs and is not the result of a selfish attitude (this is known as the ‘luxury axiom’), an increase in income due to remittances is likely to release parents from the necessity of employing their children in family work or sending them to work in the labour market. This reduction in child labour can affect the allocation of child time towards education, especially as schooling and leisure tend to jointly increase as income rises (e.g. due to remittance flows).

Our findings confirm this positive role of remittances as we find that children belonging to recipient households are less likely to be sent to work and more likely to attend school. Even more interestingly, the results of our panel fixed effects model suggest that the positive effect on schooling is stemming from domestic remittances (i.e. money sent back home from internal rather than international migrants). We attribute this important finding to the negative effects that parental absence can have on children’s wellbeing. Internal migrants are more likely to preserve a close relationship with their families of origin than international migrants, thus keeping a closer eye over their children’s welfare as well as the way in which remittances are spent.

Policy implications

Two key policy implications can be derived from our study. On the one hand, labour movement should be facilitated: when poor people migrate in search of better livelihood opportunities, the money they earn and send back home can help reduce child labour and increase children’s chances to go to school. On the other hand, parental absence can hinder the positive effects of remittances on children: public policies or development interventions aimed at providing care to children with migrant parents living abroad should therefore be put in place to ensure that international remittances become even more effective and beneficial for children’s wellbeing.