The effect of remittances on labor supply. Evidence from Tajikistan

Abstract

This research analyzes the effect of remittances on the labor supply in the Republic of Tajikistan. In order to observe this impact we use IV-Tobit regression that alows to control for endogeneity and self-selection problem in the structural equation. Using micro-level data from the World Bank survey in 2013, our results support the previous findings of negative relationship among the amount of remittances and the number of working hours of the respondents. Our main contribution consists of using a new instrument, Essential skills in Russian, along with the most popular variable that identifies the migration network in the region.