Parental absence, remittances and educational investment in children left behind: Evidence from Nepal

Nirmal Raut and Ryuichi Tanaka

Review of Development Economics, 2018, vol. 22, issue 4, 1642-1666

Abstract: This paper utilizes the third wave of the Nepal Living Standards Survey to assess the causal impact of parental absence and remittances on the educational investment in children left behind. Unlike previous studies, we separately identify parental absence and remittances, with careful consideration of self‐selection into migration and endogeneity of remittances. Using a two‐step estimation strategy, we show that parental absence has a substantive disruptive effect on education of children left behind, while remittances have a positive effect. In addition, we show that non‐parental absence has no effect on education. Further, we provide supporting evidence about the channels to disruption. Finally, we show some heterogeneity results by the child’s gender and education status of the mother. The results by child’s gender confirm that remittances relax the liquidity constraints of households by investing in education of the girls. Further, the results by education status of the mother provide evidence that an educated mother can play a role in neutralizing or mitigating the negative effects of parental absence.

Date: 2018
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