Migration, Credit and Household Consumption Expenses: An Analysis with HIES 2010 Data

Using the data on 12,240 households as sample collected from Household Income and Expenditure Survey (HIES) 2010 and adopting Two-stage Least Square (2SLS) regression approach using Propensity Score Model tool as one of the regressors to estimate average treatment effects of treated, this article attempts to examine the effects of migration and credits on consumption expenditures by households in Bangladesh separately as well as jointly while all kind of consumption expenditures are divided into major eight categories. While trying to compare the life standards in respect to per capita consumption expenditures on different items in between different groups on the basis of whether these groups have migrating members or not and have undertaken any form of credit or not, the regression results found that controlling propensity score, households taking credits expend more on all eight categories of consumption items by significant amount than households without credits and households having at least one migrant also expend more on all categories of consumption items than their contemporary other households having no migrant. But the simultaneous impact of migration and credits on consumption is negative, an interesting result revealing the fact that the households who used credit to bear the migration cost cut their consumption since most of the migrant didn’t start to send remittances during the study period or remittances sent by those migrants are either very poor at initial stage or maximum amount of it is used to repay the credits. As a result the joint impact of migration and credits on consumption expenditure is found to be negative or at minimal level. Finally, it can be concluded that the findings of the study strengthen the case for remittances and credits as a poverty alleviating policy tool by improving human capital development through increasing expenditure on food & nutrition, health & education, housing & other consumption items and suggest that utmost importance should be given in the proper management of remittances and credits in order to accrue their beneficiary impacts.