Migration, Credit and Household Consumption Expenses: An Analysis with HIES 2010 Data

Abstract

Using the data on 12,240 households as sample collected from Household
Income and Expenditure Survey (HIES) 2010 and adopting Two-stage Least Square
(2SLS) regression approach using Propensity Score Model tool as one of the
regressors to estimate average treatment effects of treated, this article attempts to
examine the effects of migration and credits on consumption expenditures by
households in Bangladesh separately as well as jointly while all kind of
consumption expenditures are divided into major eight categories. While trying to
compare the life standards in respect to per capita consumption expenditures on
different items in between different groups on the basis of whether these groups
have migrating members or not and have undertaken any form of credit or not, the
regression results found that controlling propensity score, households taking credits
expend more on all eight categories of consumption items by significant amount
than households without credits and households having at least one migrant also
expend more on all categories of consumption items than their contemporary other
households having no migrant. But the simultaneous impact of migration and
credits on consumption is negative, an interesting result revealing the fact that the
households who used credit to bear the migration cost cut their consumption since
most of the migrant didn’t start to send remittances during the study period or
remittances sent by those migrants are either very poor at initial stage or maximum
amount of it is used to repay the credits. As a result the joint impact of migration
and credits on consumption expenditure is found to be negative or at minimal level.
Finally, it can be concluded that the findings of the study strengthen the case for
remittances and credits as a poverty alleviating policy tool by improving human
capital development through increasing expenditure on food & nutrition, health &
education, housing & other consumption items and suggest that utmost importance
should be given in the proper management of remittances and credits in order to
accrue their beneficiary impacts.