Migration, remittances and household welfare in Ethiopia

This paper investigates the effect of international remittances and migration on household welfare in Ethiopia. We employ both subjective (a household's subjective economic well-being) and objective measures (asset holdings and asset accumulation) to define household welfare. A matching approach is applied to address self-selection, and by exploiting information before and after the households began receiving remittances, the study sheds light on the changes in welfare associated with international migration and remittances. The results reveal that remittances have a significant impact on a welfare variable that has previously not received much attention in the migration literature, namely household subjective economic well-being. In addition, we find that remittances have positive effects on consumer asset accumulation, especially in rural areas, but no effect on productive assets.

Keywords: remittances, migration, Ethiopia, propensity score matching

JEL Classification: F22, F24, O15