Migration, Remittances, and the Human Capital of Children in the Kyrgyz Republic

Abstract

Remittances have become one of the most important resource flows to developing countries having already outgrown private capital and official development assistance. International movement of labor and the related flow of remittances are likely to have serious implications for developing countries. Central Asian countries are not an exception in this regard with Tajikistan and Kyrgyzstan being among the largest recipient countries of remittances as a share of GDP. Indeed, Kyrgyzstan has become the top remittance-recipient country in the world as a share of GDP over the last two years (34.5 percent in 2016 and the projection of 37.1 percent this year). However, the empirical literature on the impact of both migration and remittances in countries of Central Asia, including Kyrgyzstan, is quite limited. This paper aims to fill this gap in the literature. Specifically, it analyzes the micro-level data from the unique longitudinal survey of households and individuals and examines the trends and patterns of remittances flow to Kyrgyzstan based on the macro-level data from the World Bank. Second, it enlarges virtually nonexistent body of literature on the relationship between remittances and human capital outcomes of children in Kyrgyzstan. The research applies the logistic, fixed-effects, and Hausman-Taylor techniques to the three-year panel dataset from the “Life in Kyrgyzstan” survey to mitigate the problem of pervasive endogeneity. Even though our empirical results in most cases indicate that remittances do not have a statistically significant impact on school enrollment, educational expenditure and health outcomes of children (the health indicator of underweight being the exception), the research still provides useful insights on what really contributes and how these effects vary across age-specific and regional sub-samples.