Subsidizing Remittances for Education: A Field Experiment Among Migrants from El Salvador
This paper studies the effect of educational subsidies on migrant remittances to El Salvador through a randomized control study. The study created a program titled EduRemesa wherein a migrant chose the beneficiary school or college student and a part of his/her remittances meant for education were deposited directly to the students' accounts who then could make fee payments using a specialized ATM card. Migrants from El Salvador in the Washington, DC area were selected and randomly allocated to one of the four groups created. One group acted as the control, second had the fund providing dollars in the ratio of 1:1 to the amount remitted, third in the ratio of 3:1, and the fourth had the entire EduRemesa funded by the migrant. Findings include:
- Take up was the highest in 3:1 group followed by 1:1. In both cases, female students spent more on education than males;
- Labor force participation rates had fallen down significantly compared to the control group;
- For each USD 1 received by female beneficiary students, educational expenditures on that student increase by close to USD 5;
- There is no evidence of shifting of educational expenditures from other students in the household to the target student, and the subsidy has no substantial effect on remittances sent by the migrant.