The Impact of Remittances on Poverty, the Labour Market and School Attendance
Keywords:
education, labor market, multidimensional poverty, propensity score matching, remittancesAbstract
As a result of migration, many households in El Salvador receive remittances, which totaled $8.4797 billion in 2024, equivalent to 24.0% of the Gross Domestic Product. In this context, it is worth asking what impact these funds have on socioeconomic indicators. To this end, based on the 2024 Multiple-Purpose Household Survey, with samples of 18,058 households, 35,672 people, and 12,851 individuals, the propensity score matching method was applied, establishing two equivalent observational groups. Subsequently, the average treatment effect on monetary poverty, multidimensional poverty, labor force participation, and school attendance was calculated. The results indicate that receiving remittances reduces the probability of a household experiencing monetary poverty, with differentiated and significant impacts observed depending on whether the area is urban or rural and the gender of the household head. A reduction in multidimensional poverty was also observed, with a significant impact primarily on rural households and those headed by women. In the labor market, receiving remittances reduces participation in the labor force, particularly in rural areas and among women. Finally, remittances have no impact on school attendance overall; however, a significant reduction in school attendance is observed among women. While the findings are positive in terms of poverty reduction, adverse effects on the labor market and school attendance are also identified, suggesting that the impact of remittances is heterogeneous and not necessarily beneficial.
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Reality and Reflection
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