Determinants of Migration and Remittances: Evidence from Rural Sector of Sri Lanka

Agriculture remains as one of the major sources of employment to the rural community in Sri Lanka. However, problems such as inadequate land and capital, low productivity and personal attitudes have pushed the rural agricultural worker to migrate out of the sector. As the decision to migrate is made at the household level, characteristics of the household shape up the decision to migrate and send remittances to the origin communities. Therefore, this study is an attempt to find the determinants of migration and the remittances of the rural sector of Sri Lanka with special emphasis on household level characteristics. In identifying the determinants, the study has estimated several multinomial logit models separately based on the status of migration and receipt of remittances using a nationally representative data set of Household Income and Expenditure Survey (2009/2010). The results reveal that human capital characteristics are not major positive determinants of rural sector migration and receiving remittances implying that households with better education remain in the rural sector. Rural households with more members tend to have more migrants while it is a negative determinant of the receipt of remittances. Results also suggest that rural households receive more remittances from internal migrants when they have school age children. Based on these results, this study concludes that people diversify into different income earning strategies such as migration when they have more household members while education has contributed positively to keep the rural households in the sector. Therefore, the retaining human capital can be used in the rural development process if proper policies are implemented.