California Center for Population Research

This paper studies the effect of remittances sent home by South African Black labor migrants on children’s schooling. We use cross-sectional data from the 1993-1994 Integrated Household Survey and panel data from 2002 and 2003 South African Labor Force Survey. We find that both labor migration and the likelihood of sending remittances home are much more prevalent among Blacks than among other racial groups, and thus restrict our study of the impact of migration and remittances on children’s education to Blacks. Receipt of remittances substantially increases the likelihood that children are in school, through three pathways: increased household educational spending, reduced child labor, and mitigation of the negative effect of parental absence due to out-migration. Also, remittances sharply differentiate labor migrant households. Children in households without remittances are disadvantaged compared to recipient households, and in some respect are even worse-off than their counterparts in nonmigrant households, primarily due to the deleterious effect of parental out-migration with no economic compensation. Sensitivity tests using fixed-effect and random-effect modeling show that the effect of labor migration and remittances is robust to unobserved heterogeneity and relatively consistent across subsamples and independent samples over time, although the negative effect of living in households with out-migrants but no remittances is substantially by 2002-2003, due at least in part to relaxed migration policies after the breakdown of apartheid. The paper also assesses the social consequences of remittances. We find that remittances help reduce intra-familial gender inequalities as well as inter-familial SES inequalities in schooling.