A recent literature examines whether remittances will impact investments in human capital in the source country, particularly in health and schooling. The broad consensus within the literature is that migrant remittances can lead to human capital formation in the country of origin. However, measuring the impact of remittances on health or education is challenging, because migration itself is a choice variable, as households with given underlying characteristics may be more likely to undertake migration (McKenzie and Sasin, 2007). In addition, it is important to note that migrant remittances may be directed towards multiple recipients and tracking end uses may be complex.
In a recent paper, Edwards and Ureta (2003) use a nationally-representative household survey from El Salvador (1997 EHPM) to analyze the impact of international remittances on school retention rates in El Salvador. The authors compare how two types of income, income from remittances and income from other sources, affect school attendance. Their findings suggest that income from remittances has a much larger impact on school retention rates than income from other sources. In urban areas, the average level of remittances lowers the hazard that a child will drop out of elementary school by 54 percent. Based on household level evidence from the Philippines, Yang and Martinez (2006) also find that a 10 percent increase in remittance flows will lead to a 1.7 percent increase in school attendance, and a 0.35 hour decline in child labor in a week per household.
Other studies have examined the impact of remittances on child health outcomes. Kanaiupuni and Donato (1999) investigate the impact of remittances on child health, focusing on infant survival. Their empirical analysis is based on a sample of 150-200 households and 25 communities from the Mexican Migration Project and they examine how village migration patterns affect infant survival outcomes in sending communities in Mexico. The authors’ main hypothesis is that migration is a cumulative process with varying health effects at different stages of its progression. Their results suggest higher rates of infant mortality in communities experiencing intense U.S. migration. However, their findings also suggest that the impact of migration on infant survival changes over time due to inflow of migrants’ remittances and the institutionalization of migration. Mortality risks are low when remittances are high and decrease as migration experience increases in a community. The authors conclude that migration is likely to yield eventual health benefits to all infants over time. The results do not deal with the selectivity of the migration process.
Mckenzie and Hildenbrandt (2005) investigate the impact of international migration and remittances on child health outcomes in rural Mexico using a 1997 nationally representative demographic survey. To correct for the endogeneity of migration status, the authors use historic migration networks — 1920s, state-level migration rates in Mexico as instruments for current migration stocks. The authors find that children in migrant households have lower rates of infant mortality and higher birth-weights. One contribution of this study is that the authors also explore the channels through which migration may affect health outcomes and find evidence that migration raises health knowledge in addition to its direct effect on wealth. These results provide a broader view of the health consequences of migration than is offered by the existing literature.