Remittances and Education

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Nelson Mandela said, “Education is the most powerful weapon that can be used to change the world”.[1] Remittances can are considered to foster the increase of education, by investing in human capital.[2] Many studies have suggested that the use of remittances for education has significant social and economic effects for individuals, their families and society as a whole.[3] In many developing states, education is not accessible to all or is expensive at all points. Remittances can allow for the payment of school and college fees and can enable children to study rather than work for family’s survival. Thus, remittance may act as a ‘survivalist’ income supplementation by making basic needs such as education accessible to the broader population.[4]

  • Economic Development –
    The spending of remittance on education, leads to investment in human capital, thereby going to increase in the economic growth of the nation. Remittances serve as an insurance office, protecting households against situations of transitory economic hardship that has been proven to have strong detrimental effects on children’s education and wellness issues.[5]
  • Retention Rates –
    Income from remittances has a much bigger positive impact on school retention rates as compared to the income from various other sources. In urban regions, the mean level of remittances lowers the hazard that a kid will drop out of elementary school by 54 percent. For instance, in the Philippines, established along the household level evidence, it is found that a 10 percentage growth in remittance flows led to a 1.7 percent increase in school attendance and a 0.35 hour decline in child labour in a week per family.[6]
  • Healthcare –
    Spending the remittance on education, not only improves the literacy rates as well as lead to improvement in the health and well-being of an individual. It likewise helps to advertise and maintain healthy lifestyles and positive choices, holding and nurturing human development, human relationships and personal, family and community Agreeing to a written report, an increment in the mean number of years of education due to the spending of remittances reduces child mortality by around ten percentage points from an average grade of 22.5 percentage.[7]
  • Level of Education –
    Remittance income is relevant to schooling, especially in rural areas and at a higher grade level as it is a means of paying the tuition. There are compulsory education laws in many countries where the government provides free or other forms of assistance to schools and families. This still is restricted to certain grade level. For instance, in Mexico compulsory school attendance is taken only till ninth grade. Thus, remittance income act as an important source for overcoming financial obstacles to going to college or further, especially in rural, migrant-sending communities.[8]
  • Reduces the need for Child Labor –
    Another impact of remittance spending on instruction is the reduction in the need for child laborers. Remittances receiving households reduce the probability of children participating in the labor market as compared to non-remittance receiving homes. For instance, in Ghana, remittance-receiving households have seen a fall of 2 percent in the participation of minors in the labor marketplace. It is, thus, evident that remittances curb child labor by giving kids an opportunity to go to schools as they do not have to contribute to family income.[9]
  • Millennium Development Goals –
    One of the goals (Goal 2: Achieve Universal Primary Education) of the Millennium Development Goals is being achieved by spending of remittances on education.[10] Remittances lead to better school attendance, higher school enrolment rates and additional years in school. Research as well suggests that remittances lead to almost doubling of school enrolment rates, which is a pace towards attaining the Millennium Development Goals set by the United Nations.[11]
  • Poverty Reduction-
    In the long run, expenditure on education by remittance-receiving households would lead to a reduction in poverty, particularly in rural regions. Investment in the teaching by remittances would result in an increment in the employment opportunities to individuals that will aid in poverty reduction. Various studies have shown that remittances often play an insurance role for migrant families by causing a substantial and positive impact on poverty alleviation.[12]

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[1] Cattaneo, C. (2012). Educational Expenditure and Remittances: Is there a Link? Economics of Transition, 20(1), 163-193. Retrieved from http://www.feem.it/getpage.aspx?id=6191

[2] Matano, A., & Ramos, R. (2013, April). Remittances and Educational Outcomes: Evidence from Moldova (Working paper No. 3/10). Retrieved http://www.ub.edu/searchproject/wp-content/uploads/2013/05/SEARCH-WP-3.10.pdf

[3] Kifle, T. (2007). Do Remittances Encourage Investment in Education? Evidence from Eritrea. GEFAME Journal of African Studies, 4(1). Retrieved from http://hdl.handle.net/2027/spo.4761563.0004.101

[4] Migrant-worker remittances and Burma: An economic analysis of survey results. (n.d.). Retrieved from http://press.anu.edu.au/myanmar02/mobile_devices/ch05s02.html

[5] Edwards, A. C., & Ureta, M. (2003). International Migration, Remittances, and Schooling: Evidence from El Salvador. Journal of Development Economics, 72(2), 429-461. doi:10.1016/s0304-3878(03)00115-9

[6] Yang, D. (2008). International Migration, Remittances and Household Investment: Evidence from Philippine Migrants’ Exchange Rate Shocks. The Economic Journal, 118(528), 591-630. Retrieved from http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2008.02134.x

[7] Feinstein, L., Sabates, R., Anderson, T. M., Sorhaindo, A., & Hammond, C. (2006). What are the effects of education on health? (Working paper). Retrieved https://www1.oecd.org/edu/innovation-education/37425753.pdf

[8] Sawyer, A. (2010, March 29). In Mexico, Mother’s Education and Remittances Matter in School Outcomes. Retrieved from http://www.migrationpolicy.org/article/mexico-mothers-education-and-remittances-matter-school-outcomes

[9] Joseph, G., & Plaza, S. (2010, June). Impact of Remittances on Child Labor in Ghana (Working paper). Retrieved http://www.iza.org/conference_files/amm2010/plaza_s6083.pdf

[10] UN Millennium Project | About the MDGs. (n.d.). Retrieved from http://www.unmillenniumproject.org/goals/

[11] Rajan, S. I. (2014). India Migration Report 2014: Diaspora and Development.

[12] Goff, M. (2008, January). How Remittances Contribute to Poverty Reduction: A Stabilizing effect (Working paper). Retrieved http://cerdi.org/uploads/ed/2010/2010.08.pdf