International Remittances and Human Capital Formation

This article investigates the effect of international migration on children left behind in Peru. The theoretical model is based on human capital theory and educational investment decision linked to remittances. The model analyzes the role of international remittances on the investment decision between sending children to a public school or to a private school. Using data for the period 2007-10, this study addressed the problem of a left-censored endogenous variable for panel data by using a two-step estimation, and found that international remittances have a positive effect on the likelihood to send children to private schools controlling for absenteeism of parents.