PMMA-12594 Remittances Impact on Youth Labour Supply: Evidence from Kyrgyzstan
This research aims to investigate the impact of remittances from international migration on left behind
youth occupational choice. Labor supply choice of youth is grouped as employee,
family contributing worker, own-account worker and unemployment. Labor supply is analyzed
both at the extensive margin â€“ participation of youth labor across these occupational choices,
and at the intensive margins â€“ working hours within each occupational choices. The analysis use
â€œLife in Kyrgyz Republicâ€ survey cross-sectional data for 2011. To overcome endogeneity
concerns instrumental variable approach is used. Given the multinomial dependent variable
and discrete endogenous variable â€œconditional mixed processâ€ estimation technique is applied.
Empirical results show that remittances impact on left-behind youth in Kyrgyzstan is mainly
reflected as labor substitution effect. Unlike findings of some previous studies, we did not find
any strong evidence of remittance-dependency behavior of left behind youth. However,
increase of likelihood for youth as family contributing worker does not necessarily imply increase
of productivity of labor force. There is no sufficient evidence of the fact that return from
migration as the job creating activities and efficient utilization of remittances for own-account
works exist. Moreover, female youth are more inclined to family contributing works both at the
extensive and intensive margins. Results are robust to inclusion of other variables on individual
characteristics. Given these empirical evidences, priority for the youth employment policy should
be a channeling remittances into productive use. Moreover, educational programs with the
emphasis on female youth and special programs on youth entrepreneurship and access to
financial resources will be important for youth self-employment activities.
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