The impact of migration and remittances on labor supply in Tajikistan

Enerelt Murakami, Eiji Yamada and Erica Paula Sioson

Journal of Asian Economics, 2021, vol. 73, issue C

Abstract: Remittances from labor migrants abroad have become the largest component of financial flows to developing countries. While they are an important source of foreign currency for low-income countries, the impact of outmigration and remittances on the economic development of the sending country is ambiguous. To narrow this knowledge gap, this paper examines their impact on the domestic labor market, using the case of Tajikistan – a labor migrant contributor and remittance dependent country in Central Asia. Specifically, we estimate the impact of international migration and receipt of remittances on the labor supply decisions and employment of the family members left behind. To ensure rigorous inferences, we apply a control function approach using unique high-frequency household panel data. Our method enables us to correctly address the simultaneity of migration/remittance and labor supply decisions of the left-behind members. Our main estimates are that sending migrants reduces the labor supply of the left-behind members by 5.4 percentage points, and that receiving remittances reduces it by 10.2 percentage points, respectively. These findings suggest that the reservation wage effect of having a migrant member and receiving remittances is large and surpasses other positive effects they might have.

Keywords: Migration; Remittances; Labor market participation; Endogenous switching; Central Asia; Tajikistan (search for similar items in EconPapers)
JEL-codes: F22 F24 J22 J61 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: The Impact of Migration and Remittances on Labor Supply in Tajikistan (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:73:y:2021:i:c:s1049007820301482

DOI: 10.1016/j.asieco.2020.101268

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