Christopher James R. Cabuay
De La Salle University, Manila, Philippines

Year: July 2017
Volume: 27 No. 1
Pages: 28–58


International migration has been a significant avenue for many Filipinos to make use of interspatial differences in purchasing power, to send home remittances, and to maximize household income. However, migration has had a stigma of being disruptive to children’s educational outcomes, and remittances have been noted to cause dependence among working age members. This study estimates the impact of remittances on the human resource development, employment, and entrepreneurial outcomes and choices of the Philippine youth, individuals aged fifteen to thirty, using CBMS data census of selected De La Salle school communities. I employ an instrumental variable multinomial logistic regression to look at the impact of remittances on human resource development outcomes, that is, whether a young person is working, studying, both, or neither, and find that those in households receiving remittances are more likely to end up studying than working or being idle. This serves as evidence against the stigma that remittances cause dependency or idleness. I employ the same empirical strategy to look at the impact of remittances on employment outcomes, that is, whether a young person is working in a private household, a public/private establishment, self-employed, working in a family-run business, or not working. I find that they are most likely to work for a private household or a public/private establishment rather than be self-employed, which paints a sad picture for entrepreneurship. I calculate the average treatment effect on the treated (ATT) of remittances on households’ propensity to be engaged in entrepreneurial activity, and find that remittances have little to no impact (and at times negative) on the likelihood of households and individuals being engaged in entrepreneurship. Overall, though the impact of remittances may be lackluster for employment and entrepreneurship, it encourages the accumulation of human capital.