25 February 2022

Kyrgyz migrants’ remittances: a missed opportunity for development

Is one dollar of remittance income equal to one dollar of any other source of income in the eyes of Kyrgyz households? Nurgul Tilenbaeva devoted a PhD essay to this question. Her results suggest that it is not, meaning that money does have labels. Besides, in line with popular claims in the media, Kyrgyz families spend more of their remittance income budget on celebrations as compared to other income budget.

Your PhD thesis is comprised of three essays addressing various issues that Kyrgyz people face on their path to economic growth. One essay, Mental Accounting, Remittances and Celebrations, studies how households spend their money differently depending on whether it comes from remittances or from other income sources. How did you come to choose that research topic?

It all started with a conversation with my father who suggested looking at celebrations from the academic viewpoint. To give you the context, I come from a culture where celebrations and rituals play a prominent role in people’s lives. Nevertheless, there is no serious scholarly discussion on this subject, in spite of the fact that in many developing countries even the poorest spend tangible amounts of money on celebrations, which seems counter-intuitive at first. This phenomenon always fascinated me, and a chance to study it in the academic context seemed unique to me.

After I decided to focus on celebrations and rituals, I needed to find the exact question I wanted to study. I came across a local newspaper article on how remittances sent from migrants abroad are spent by the families left behind. It was argued that money transfers are spent on celebrations mostly, which raised questions on their development impact. As Kyrgyzstan is in the top three countries of the world that receive the largest amounts of remittances, a discussion on how they are spent has direct implications for policy. Thus, I thought of combining these aspects in one of my essays and studying whether households view income from remittances and income from other sources differently and, if so, whether it is indeed the case that at the margin, remittances are spent more on celebrations and rituals. 

Can you tell us about your methodology and your findings?

The main question addressed in the essay is whether one can equate a dollar of remittance income and a dollar of any other income. Using the dataset “Life in Kyrgyzstan” that covers 3,000 households over five years (2010–2013 and 2016), I extend the Working-Leser expenditure model to incorporate a constant elasticity of substitution function, which allows explicitly calculating the degree of substitution between remittance income and other household income. In addition, control function approach is employed to address endogeneity of remittance income due to selection bias. I find that remittance income and income from other sources are in fact not perfect substitutes in the eyes of Kyrgyz households. In addition, remittances are spent on consumption goods mostly, in line with the pessimistic view of remittances in the literature. Besides, celebrations, funerals, and rituals tend to be financed more from migrant transfers than from other sources of income, in line with popular claims in the media.

What could be the policy implications of these findings?

The finding that households view remittance income and other sources of income differently, which suggests that families engage in mental accounting, is of direct policy relevance. It means that potentially migrant money transfers may cause behavioural changes at the household level, and that their development impact can be huge. However, as remittances are spent on consumption goods mostly, with celebrations and rituals being one example, it seems that remittances represent a missed opportunity in the context of Kyrgyzstan. If the government could direct its efforts towards encouraging investment activities for migrant families, this would have direct benefits for the receiving communities. 

Can you briefly describe your other two essays?

In Trade and Poverty: Evidence from Kyrgyz Households, I study the effect of international trade on the wellbeing of Kyrgyz farmers. By constructing a measure of demand shock for agricultural commodities produced and sold by the farm households and interacting it with a measure of natural trade openness, the production and consumption channels of the effect of trade on poverty are explored. I find that trade has a large effect on Kyrgyz farmers. However, whether this effect is positive or negative and the magnitude of the effect crucially depend on farmers’ level of integration into markets: those living close to economic centres, on average, benefit from trade, while those living in very remote areas are not able to take advantage of this potential. 

The other essay, From One’s Cradle to Another’s Grave: Death and Children’s Nutritional Status, extends upon the issue of rituals but from the perspective of funerals. A unique feature of funerals in Kyrgyzstan is their lavishness, which represents an additional source of financial struggle for mourning households. Children of young age may be especially vulnerable to these costs and therefore, this essay examines the effect of the loss of a family member on children's nutritional status. I attempt to distinguish between types of death and between economic and psychological costs of death. I find that bereavement has a large negative impact on the overall nutritional status of children less than 60 months of age, and the effects are the largest in the case of the death of a major breadwinner that is unexpected in nature. When disaggregating the effects, it is found that loss has immediate consequences on children resulting in acute malnutrition but has no long-term implications for their nutritional status. Additionally, it is discovered that there are both economic and emotional costs to death, and whenever monetary mechanisms are in place, burial expenditures are among the most important. 

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Nurgul Tilenbaeva defended her PhD thesis in Development Economics in November 2021. Professor Jean-Louis Arcand presided the committee, which included Associate Professor Martina Viarengo, thesis director, and Associate Professor Mariacristina Rossi, Department of Management, University of Turin, Italy.

Citation of the PhD thesis:
Tilenbaeva, Nurgul. “Essays on Trade, Remittances and Child Health.” PhD thesis, Graduate Institute of International and Development Studies, Geneva, 2022.

To access the PhD thesis, members of the Graduate Institute can visit this page of the Institute's repository; others may contact Dr Tilenbaeva at

Banner picture: excerpt from an illustration by Dominik Bruhn/
Interview by Nathalie Tanner, Research Office.