The Impact of Remittances on Household Investment in Education, Housing, and Entrepreneurship in Khatlon Region of Tajikistan (using survey data by IFPRI in 2023)

Abstract

For over the last decade, remittance has made around one-third of Tajikistan’s Gross Domestic Product (GDP), which makes it one of the most remittance-dependent countries. This research examines the effect of remittances on investment decisions across households in Tajikistan using the survey data collected by International Food Policy Research Institute (IFPRI) in 2023 across 12 districts of the Kathlon district, emphasizing on investment in education, housing, and entrepreneurial activities. A 2-step-least-square regression and Probit regression models are used in do analyze this data gathered from over 2000 households. The analysis focuses on the impact of remittances on educational expenses as a factor of investment in human capital, the effect on housing improvement as a factor of investment in livelihood, and the effect on entrepreneurial activities as a factor of investment in financial stability. The results show that there is not statistically significant effect of remittances on educational expenses and housing, however, there is little, but statistically significant positive effect that remittances has on engagement in entrepreneurship. Based on these results, this paper recommends such policies as financial literacy trainings, encouraging/incentivizing education, and making the environment simpler for initiating an enterprise. The target population of such programs should be remittance-receiving households. This will increase the likelihood of remittance funds being driven towards long term goals, encourage investing in education, and increase the likelihood of remittance funds being used for initiating a new, or boosting a current enterprise.