Do remittances reduce school dropout in Bangladesh? The role of government's administrative and structural support

In the development literature, the impact of remittances on educational outcomes is a contentious topic and remains at the heart of policy discussions on enhancing quality education in developing countries. Bangladesh being one of the world's top remittance recipients, it's crucial to understand the influence of remittances on educational outcomes and school dropout rates. In this study, we examine the impact of internal remittances (from inside Bangladesh) and international remittances (from outside Bangladesh) on school dropout at the household level using a unique, national, and two most recent datasets covering migration and remittance-related information from the Bangladesh Household Income and Expenditure Survey (HIES). Considering the methodological issues such as endogeneity sources and self-selection, we used the Instrumental Variable Cox Proportional Hazard model and included asset scores in the models as a proxy measure of households’ wealth index. Furthermore, all the outcomes using the econometric approaches were segregated into three groups: i) those who received no remittances, ii) those who received internal remittances, and iii) those who received international remittances for both HIES 2010 and HIES 2016. This analysis provides a critical picture of the influence of remittances on school dropouts in Bangladesh by giving us a significant positive outcome of the remittances as a whole on education. With the increase in remittance inflows in Bangladesh, the risk of children aged 6-18 dropping out of education are more likely to fall. Aside from the positive impact, this study suggests that government should take the initiative of reducing the costs of sending remittances to Bangladesh. Moreover, the government should provide procedural and structural support to migrants.