Target-Monitored Remittance Channeling for Human Capital Investment
Migrants sending remittances home often struggle to ensure funds are spent on intended long-term developmental goals, such as education, rather than immediate daily consumption.
Picture this
Imagine sending money home with a store voucher that can only be redeemed for school textbooks, rather than sending cash that could easily be spent on groceries or entertainment. Restricting how funds can be redeemed ensures the money accomplishes its specific intended purpose.
What the evidence says
Financial products providing migrants with direct monitoring and targeted channeling toward home-country tuition lead to significantly higher total remittances allocated to education.
- Who
- Transnational households across El Salvador and Philippine migration corridors (e.g., Filipino migrants in Rome, Italy).
- How
- Randomized controlled trials and lab-in-the-field experiments comparing standard cash remittance transfers against soft and hard commitment financial products that channel funds directly to educational institutions.
What to do
Develop targeted financial remittance instruments that allow senders to direct payments straight to service providers like schools or health clinics.
From the source
"Ambler et al (2015) and De Arcangelis et al (2015) examine, among El Salvador and Philippine transnational households respectively, the impact of novel remittance products that channel funds toward education in the home country."
Financial Education and Financial Access for Transnational Households: Field Experimental Evidence from the Philippines