Destined to Receive: The Impact of Remittances on Household Decisions in Armenia

Abstract

The paper uses data from Armenia to test the implications of remittance flows on behavior of receiving households. We find that remittance-receiving households work fewer hours and spend less on the education of their children. While saving more, these households are not leveraging their savings to borrow from the banking system to expand their business activities. This evidence suggests that the benefits of remittances might be overstated and emphasizes the importance of measuring their impact in a general- rather than a partial-equilibrium context.