Do Remittances Encourage Investment in Education? Evidence From Eritrea

Abstract

The purpose of this study is to estimate the impact of remittances on child education in Eritrea using sample data from remittance-receiving households that have school-age children. Key findings from the regression analysis show that households’ education ratio (the ratio of remittances spent on child education to the total amount of remittances received by households) decreases with the increase in remittances received; however, there is still a positive relationship between remittances and expenditure on child education out of remittances received. The remittance elasticity for investment in child education and the marginal remittances share to child education confirm that remittance-receiving households spend a higher proportion of remittances on child education. Unlike the conventional view that household income from remittances is used exclusively for consumption purposes, the paper argues that, in Eritrea, remittance-receiving households with school-age children spend a significant portion of the remittances on child education.