Remittances and Labor Supply in the Northern Triangle
Through substitution and income effects, remittances can alter an individual's allocation of time between market activities and household production, decreasing labor supply. This paper uses propensity score matching and household surveys for...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/972271537470563942/Remittances-and-Labor-Supply-in-the-Northern-Triangle http://hdl.handle.net/10986/30446 |
| Summary: | Through substitution and income effects,
remittances can alter an individual's allocation of
time between market activities and household production,
decreasing labor supply. This paper uses propensity score
matching and household surveys for 2006 and 2014 to estimate
the impact of remittances on labor supply in the three
countries of the Northern Triangle (El Salvador, Guatemala,
and Honduras). The results show that remittances are
associated with a reduction in labor force participation,
particularly among women. This effect is largest for
Salvadoran women (13 percentage points). A sensitivity
analysis finds that the negative effect on labor force
participation rates of men in El Salvador and Guatemala and
women in El Salvador is robust to potential selection bias.
Receiving remittances is also associated with a lower
likelihood of young adults being in school or at work, with
this effect being robust to selection bias for young men in
Guatemala. At the same time, the evidence suggests that
remittances may be supporting small enterprises and
self-employment in El Salvador and Guatemala. The analysis
does not find robust evidence of remittances affecting the
labor supply in Honduras in 2014. |
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