South‐South Migration: Remittances of Labour Migrants and Household Expenditures in Uzbekistan

Abstract

We investigate the impact of international labour migrants’ remittances on household expenditures in Uzbekistan as an understudied case of South‐South migration. In doing so, we use instrumental variable regressions to address endogeneity caused by self‐selection bias. We find that remittance‐receiving households spend a significantly smaller part of their budgets on food and health. This finding contrasts with studies of South‐South remittances in Africa that find that households tend to spend most of their remittance incomes on food. Our estimations also provide evidence that remittance‐receiving households spend a larger part of their total expenditures on non‐food consumption. Remittances’ impact on healthcare expenditures is negative and on education expenditures is insignificant. These results support the view that remittances in this South‐South migration corridor are channelled mainly to consumer goods, limiting their contribution to economic development.

Do migrant remittances affect household spending? Focus on wedding expenditures

“…One of the few such examples is Clément ( 2011 ), who applies PSM analysis to a dataset for Tajikistan to show that households that receive remittances spend more on food, non-food items, and health than do households that do not. Analogously to Kakhkharov et al ( 2020 ), Clément ( 2011 ) finds no evidence of a significant effect of remittances on education expenditures.…”

“…Empirical research on the relationship between remittances and household consumption in Uzbekistan is scant. Kakhkharov et al ( 2020 ), using data from the World Bank/GIZ Uzbekistan Jobs, Skills, and Migration Survey, find that remittance‐receiving households spend a significantly smaller part of their budgets on food and health, and a larger part of their total expenditures on non‐food consumption. Since Kakhkharov et al ( 2020 ) use instrumental variable estimations to correct for endogeneity and this strategy relies on the robustness and quality of available instruments, the results are highly sensitive to the quality of the instruments (Adams 2010 ).…”

“…Third, we place our research in the infrequently studied transition context of Uzbekistan, a country that has seen large inflows of remittances during the last two decades. As such, this paper is related to the Kakhkharov et al ( 2020 ) and Kakhkharov and Ahunov ( 2020 ) studies, which use the same dataset. However, in contrast with Kakhkharov et al ( 2020 ), we specifically focus on a particular type of expenditure (wedding ceremonies) and use a different methodology.…”

“…As such, this paper is related to the Kakhkharov et al ( 2020 ) and Kakhkharov and Ahunov ( 2020 ) studies, which use the same dataset. However, in contrast with Kakhkharov et al ( 2020 ), we specifically focus on a particular type of expenditure (wedding ceremonies) and use a different methodology. This allows us to scrutinize the link between remittances and a particular type of conspicuous consumption.…”

Migration and justice in the era of sustainable development goals: a conceptual framework

“…In Kyrgyzstan, and also worldwide, large portions of the remittances are invested in family subsistence (e.g. Schoch et al 2010;Thieme and Ghimire 2014;Hoang and Yeoh 2015;Kakhkharov et al 2020). Received money goes into better nutrition and medical care, is invested in a car, housing and livestock, as well as education for children or to repay existing debts.…”