The impact of foreign and domestic remittance types and senders on education outcomes

Migration and remittances are very important for Nepal, yet the country continues to be plagued by low financial development. Increases in human capital investments, such as enrollment of school‐aged children, are a possible gain from the country's labor movements, which can be leveraged further through an understanding of the microeconomic processes involved. This study examines how remittances from both household and nonhousehold members affect school enrollment rates for children in Nepalese families. We analyze the positive and negative impacts of migration and remittances separately and consider both the type and location of the remittance sender using the Nepal Living Standards Survey (NLSS‐III) of 9,335 school‐aged children. We find enrollment more associated with an exogenous process and use this to estimate marginal effects in which remittances significantly increase children's school enrollment by about 2% points in most cases. These results suggest policymakers should encourage domestic migration (which allows proximity between senders and recipients of remittances as well as less family disruption).