Estimating the Economic Effects of Remittances on the Left-Behind in Cambodia

Abstract

Using propensity score matching with the 2009 Cambodia Socio-Economic Survey of households, this study examines the effects of remittances on indicators of household wellbeing: poverty, consumption and labour participation of non-migrant members. The theoretical framework is built upon a “new economics of labour migration”, hypothesising that the emigration decision is jointly determined by households and individual migrants and that remittances basically represent a form of contractual arrangements between them. The results indicate that households with at least one migrant member and which receive remittances could reduce their poverty headcount rate by 3-7 percentage points vis-a-vis their matched controls. Remittances also reduce depth and severity of poverty of treated households. On the contrary, remittances generate a 5-9 percent “dependency effect” on working age adults who are employed due to reduced weekly hours worked. The impact of remittances on labour participation and salary income is, however, vulnerable to unobservable factors.