International Remittances and Human Capital Development in Nigeria: Evidence from a Time Series Analysis
Main Article Content
Abstract
This paper examines whether international remittances serve as a driver of human capital development in Nigeria or primarily function as short-term household support. Using annual data for 1990–2024, the study analyses the relationship between remittances and three dimensions of human capital—education, health, and income—proxied by school enrolment, life expectancy, and real GDP per capita. The empirical approach combines unit root testing, Johansen cointegration, and a Vector Autoregressive (VAR) framework to distinguish between correlation, causality, and long-run dynamics. The results reveal a clear divergence between correlation and causation. While remittances are strongly associated with improvements in life expectancy and income, they exert no statistically significant causal effect on any of the human capital indicators and show no evidence of a stable long-run equilibrium relationship. These findings suggest that remittances in Nigeria act primarily as short-term welfare stabilisers rather than as engines of sustained human capital accumulation. The study highlights the importance of institutional and financial conditions in mediating development outcomes and underscores the need for policy frameworks that channel remittances into productive, human capital-enhancing investments.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Your article is protected under Creative Commons CC BY 4.0 user licence, copyright guide.
References
Adams, R. H., & Cuecuecha, A. (2013). The impact of remittances on investment and poverty in Ghana. World Development, 50(1), 24–40. https://doi.org/10.1016/j.worlddev.2013.04.009
Adams, R. H., & Page, J. (2005). Do international migration and remittances reduce poverty in developing countries? World Development, 33(10), 1645–1669. https://doi.org/10.1016/j.worlddev.2005.05.004
Adepoju, A., & Ibrahim, I. (2023). The impact of remittances on human capital in Sub-Saharan African countries. African Development Review, 35(2), 187–201. https://doi.org/10.1111/1467-8268.12607
Amuedo-Dorantes, C., & Pozo, S. (2010). Accounting for remittance and migration effects on children's schooling. World Development, 38(12), 1747–1759. https://doi.org/10.1016/j.worlddev.2010.05.008
Azizi, S. (2018). The impacts of workers' remittances on human capital and labor supply in developing countries. Economic Modelling, 75, 377–396. https://doi.org/10.1016/j.econmod.2018.07.011
Bakare, A. (2019). Foreign remittances and human resource development in developing countries. Journal of Economics and Development Studies, 7(1), 1–15.
Barro, R. J. (2001). Human capital and growth. American Economic Review, 91(2), 12–17. https://doi.org/10.1257/aer.91.2.12
Barwa, S. (2018). Remittances, poverty, and human capital: Evidence from developing countries. Journal of International Development, 30(4), 556–573. https://doi.org/10.1002/jid.3352
Becker, G. S. (1993). Human capital: A theoretical and empirical analysis, with special reference to education (3rd ed.). University of Chicago Press.
Carling, J. (2008). The determinants of migrant remittances. Oxford Review of Economic Policy, 24(3), 581–598. https://doi.org/10.1093/oxrep/grn030
Central Bank of Nigeria (CBN). (2022). Statistical Bulletin. Abuja: CBN.
Chami, R., Fullenkamp, C., & Jahjah, S. (2008). Macroeconomic consequences of remittances. IMF Occasional Paper No. 259. International Monetary Fund.
Chukwunonso, N. (2024). Examining the impact of remittances on human capital development: Evidence from ECOWAS. West African Journal of Economics, 12(1), 34–52.
Docquier, F., & Rapoport, H. (2012). Globalization, brain drain, and development. Journal of Economic Literature, 50(3), 681–730. https://doi.org/10.1257/jel.50.3.681
Ekeocha, P. (2021). Remittances, institutions, and human development in Sub-Saharan Africa. Journal of African Development, 23(1), 45–67.
Granger, C. W. J., & Newbold, P. (1974). Spurious regressions in econometrics. Journal of Econometrics, 2(2), 111–120. https://doi.org/10.1016/0304-4076(74)90034-7
Gupta, S., Pattillo, C., & Wagh, S. (2009). Effect of remittances on poverty and financial development in Sub-Saharan Africa. World Development, 37(1), 104–115. https://doi.org/10.1016/j.worlddev.2008.05.007
Ibe, C., & Obasi, T. (2018). Role of liquidity in the remittances–human capital development nexus in emerging economies. International Journal of Economics and Finance, 10(2), 44–59.
Lu, Y., & Treiman, D. J. (2011). Migration, remittances and educational stratification. Social Forces, 89(4), 1119–1143. https://doi.org/10.1093/sf/89.4.1119
Meyer, J. B. (2001). Network approach versus brain drain: Lessons from the diaspora. International Migration, 39(5), 91–110. https://doi.org/10.1111/1468-2435.00173
Newland, K., & Patrick, E. (2004). Beyond remittances: The role of diaspora in poverty reduction in their countries of origin. Migration Policy Institute.
Okwu, O. J., Nwosu, A., & Iheanacho, C. (2023). Do diaspora remittances contribute to human capital development in Nigeria? Journal of Development Policy and Practice, 8(3), 212–228.
Osabuohien, E. S., & Efobi, U. R. (2013). Africa's diaspora remittance flows: Boon or bane? African Review of Economics and Finance, 5(1), 109–130.
Ratha, D., De, S., Plaza, S., Schuettler, K., Wyss, H., Yi, S., & Yousefi, S. R. (2019). Data release: Record high remittance flows in 2018. World Bank.
Sharma, D. (2024). A review on remittances and their effect on human development in developing countries. Global Development Review, 6(2), 98–115.
Uweis, A. (2022). Financial development, remittances, and sustainable human capital investment. Journal of Sustainable Finance and Development, 5(1), 22–41.
World Bank. (2023). Migration and Development Brief