(2015) The effect of Remittances on Labour Supply in the Republic of Haiti
Summary — This research paper examines how remittances affect labor supply in Haiti, finding that remittances lead to a decline in labor market participation and working hours. The study addresses methodological issues and finds that contrary to other countries, the effect is stronger among male household heads than female ones.
Key Findings
- Remittances lead to a decline in labor market participation and hours worked in Haiti, showing dominance of income effects over substitution effects.
- Contrary to other countries, the effect of remittances on labor supply is larger among male household heads than female counterparts.
- The presence of a spouse reduces the remittance effect on male heads by half, suggesting wives' labor supply also responds to remittances.
- The fall in labor supply is halved for female heads living in rural areas.
- Haiti is the fourth largest sender of tertiary education migrants globally and potentially the world's largest exporter of skilled migrants by population size.
Full Description
This research paper analyzes the effect of remittances on labor supply in Haiti using the 2001 Haiti Living Conditions Survey (ECVH-2001). Haiti is identified as the prime international remittances recipient country in the Latin American and Caribbean region relative to its GDP. The study addresses several econometric issues including endogeneity of remittances, zero-inflated dependent variables, and self-selection of migrants.
The paper provides historical context on Haitian migration, describing three waves of emigration: the early 20th century economic migration to Cuba and Dominican Republic, the 1960s political migration during the Duvalier era targeting educated middle-class citizens, and ongoing economic migration. Haiti has become the world's fourth-largest sender of tertiary education migrants and potentially the world's largest exporter of skilled migrants by population size.
Remittances have grown steadily and outpace foreign direct investment and exports since 2000, with nearly 90% originating from North America. The study finds that remittances allow some households to escape poverty and serve as vehicles for social inclusion, though they don't necessarily reduce inequality as they accrue more to higher income deciles.
The empirical analysis reveals that remittances lead to decreased labor market participation and working hours, consistent with theoretical predictions showing dominance of income effects over substitution effects. However, uniquely for Haiti, the effect is stronger among male household heads than females, contrary to findings in other countries where women typically show greater sensitivity to remittances.