The Impact of International Remittances on Child Outcomes and Household Expenditures in Nepal

Nepal has one of the highest ratios of international remittances to gross domestic product in the world. We examine whether the massive inflow of international remittances affects child schooling, child labour and household expenses. Controlling extensively for a host of observed characteristics of households and migrants, and using an instrumental variable approach, this research finds no effect of international remittances on child education or child labour in Nepal. However, it does find a significant increase in non-food expenditures, including education spending, due to international remittances. Despite increased expenditure on child education, educational outcomes are not improving because of international remittances.