The Impact of Remittances on Children’s Educational Attainment: Evidence from Egypt

Abstract

People often migrate in order to improve their family’s standard of living. International migration is a widespread phenomenon among Egyptians and remittances can play an important role in alleviating household budget constraints. How do Egyptians invest their income received from remittances? Do remittances act as a significant tool to relax budget constraints for the household sector? Can we capture the relevant impact of the remittances on the education level in Egypt? The purpose of this study is to examine the impact of remittances on the level of educational attainment of children between ages 6-21 in Egypt. We distinguish this impact among two categories of individuals according to their age: the school-aged individuals and the university-aged persons. Two important contributions can be highlighted from our study: First, to the authors’ knowledge, this is the first study that provides information on how do people invest their income received from remittances in Egypt, especially after the 25th of January revolution. Second, it measures the impact of remittances on educational attainment rather than school enrollment rates, as adopted in the previous studies. Using the latest available dataset on Egypt that includes detailed information on households’ socioeconomic background and migration, the Egypt Labor Market Panel Survey (ELMPS, 2012), we imply an Ordered Probit Model using an Instrumental Variable (IV) approach to estimate the impact of remittance receipt on educational attainment. Findings show that remittances relax budget constraints positively impacting the educational attainment of university-aged youth. However, empirical results do not find any impact of remittances the school-aged individuals.

Keywords: Households, Remittances, Education

JEL Classification: J61, O15, F22, F24