Is There a Household Remittance Trap? Evidence from Sub-Saharan Africa
From a macroeconomic perspective, large influxes of remittances often result in economic stagnation (Chami et al., 2018). At the household level, however, there is little research on remittances, especially in Sub-Saharan Africa where data availability is a constraint. This paper contributes to the literature by considering the impact of remittances on employment at the household level. I take advantage of Afrobarometer survey data from two rounds and six countries where remittances contribute to a substantial portion of GDP. After using both Heckman’s Selection Model and probit and ordered probit models, I am able to consider whether those reliant upon remittances are more or less likely to be employed, and in what capacity. I also consider a change in the wording of the remittance question between survey rounds. My results show that those receiving remittances each month are 7.4% less likely than those who receive no remittances to be employed.