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The impact of migration and remittances on labor supply in Tajikistan

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  • Murakami, Enerelt
  • Yamada, Eiji
  • Sioson, Erica Paula

Abstract

Remittances from labor migrants abroad have become the largest component of financial flows to developing countries. While they are an important source of foreign currency for low-income countries, the impact of outmigration and remittances on the economic development of the sending country is ambiguous. To narrow this knowledge gap, this paper examines their impact on the domestic labor market, using the case of Tajikistan – a labor migrant contributor and remittance dependent country in Central Asia. Specifically, we estimate the impact of international migration and receipt of remittances on the labor supply decisions and employment of the family members left behind. To ensure rigorous inferences, we apply a control function approach using unique high-frequency household panel data. Our method enables us to correctly address the simultaneity of migration/remittance and labor supply decisions of the left-behind members. Our main estimates are that sending migrants reduces the labor supply of the left-behind members by 5.4 percentage points, and that receiving remittances reduces it by 10.2 percentage points, respectively. These findings suggest that the reservation wage effect of having a migrant member and receiving remittances is large and surpasses other positive effects they might have.

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  • Murakami, Enerelt & Yamada, Eiji & Sioson, Erica Paula, 2021. "The impact of migration and remittances on labor supply in Tajikistan," Journal of Asian Economics, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:asieco:v:73:y:2021:i:c:s1049007820301482
    DOI: 10.1016/j.asieco.2020.101268
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    2. Md Nazirul Islam Sarker & Md Abdus Salam & R. B. Radin Firdaus, 2024. "Do female labor‐migrated households have lower productivity? Empirical evidence from rural rice farms in Bangladesh," Growth and Change, Wiley Blackwell, vol. 55(1), March.
    3. Sarah Jacobs & Oladipo Olalekan David & Abigail Stiglingh-Van Wyk, 2023. "The Impact of Urbanization on Economic Growth in Gauteng Province, South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 13(2), pages 1-11, March.
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    5. Usman Alhassan & Jean‐Claude Maswana & Kazuo Inaba, 2024. "International remittances and labor supply in Nigeria: Do educational attainment and household income matter?," African Development Review, African Development Bank, vol. 36(3), pages 471-485, September.
    6. Shankar Ghimire & Kul Kapri, 2023. "Household Income, Migration Networks, and Migration Decisions," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(6), pages 1484-1507, December.
    7. Waqas Shair & Mumtaz Anwar & Saem Hussain & Neelam Kubra, 2024. "The Differential Effect of Internal and External Remittances on Labor Participation and Employment Choices in Pakistan," SAGE Open, , vol. 14(3), pages 21582440241, July.
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    More about this item

    Keywords

    Migration; Remittances; Labor market participation; Endogenous switching; Central Asia; Tajikistan;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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