Remittances, Labour Supply and Activity of Household Members Left-Behind

This paper analyses the role of remittances on labour supply and activity of household members left behind, by explicitly distinguishing between different types of self employment. Contrary to the existing evidence, we find no ‘dependency’ effect of remittances. Our results show that remittances received by households in Tajikistan decrease the probability of wage employment and increase that of small-scale self employment activities of men staying behind, without affecting the number of job specific hours worked. Any positive effect on economic development would be, however, limited, as self-employment is in rather small-scale activities that do not generate a regular income stream.