Working Paper: NBER ID: w9766
Authors: Alejandra Cox Edwards; Manuelita Ureta
Abstract: We examine the effect of remittances from abroad on households' schooling decisions using data for El Salvador. Following the massive war-related emigration of the 1980's, remittances became a significant source of household income throughout the 1990's. We use the Cox proportional hazard model to examine the determinants of school attendance. Measuring income from a source that is uncorrelated with parental schooling remittances , we find that remittances have a large, significant effect on school retention. We estimate that while household income net of remittances has a small, though significant, impact on the hazard of leaving school in rural and urban areas, remittances have a much larger impact on the hazard of leaving school. In urban areas, the effect of remittances is, at its smallest, 10 times the size of the effect of other income. In rural areas, the effect of remittances is about 2.6 times that of other income. Our finding is of interest in that it suggests that subsidizing school attendance, particularly in poor areas, may have a large impact on school attendance and retention, even if parents have low levels of schooling.
Keywords: remittances; schooling; El Salvador
JEL Codes: F22; I22; I28; J24; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Remittances (F24) | School Retention (I21) |
| Household Income (net of Remittances) (F24) | Hazard of Leaving School (I21) |
| Remittances (F24) | Hazard of Leaving School (I21) |