# SPLIT DECISIONS

There is often an important change in household income that could alleviate credit constraints, and there is a change to the migrant’s participation in household decisions and in home production.

First, economists have long investigated how credit constraints shape household decisions on savings and investment. Recent influential studies trace the effects of increases in capital on investments in home production and new business.<sup>1</sup> Others stress the effects of credit constraints on investments in human capital,<sup>2</sup> and on consumption decisions.<sup>3</sup> A common theme is that access to capital substantially alters all of these decisions in many settings.

Second, and separately, economists have studied the effect of household composition and decision-making structure on finance and investment choices (Becker 1991; Bergstrom 1997). An important strand of literature studies the effect of shifts in decision-making power on household investments (broadly considered), especially testing whether household savings and investment decisions change when direct control over income shifts from one member to another.<sup>4</sup> A different strand traces the effects of parental absence—through one parent’s labor supply, departure, or death—on investments in children’s human capital.<sup>5</sup> These effects, too, are typically substantial.

Migration bundles these two effects.<sup>6</sup> The combined effect has been the subject of a

> 1These studies include Hubbard (1998); Hurst and Lusardi (2004); Udry and Anagol (2006); De Mel et al. (2008); McKenzie and Woodruff (2008); Banerjee et al. (2010); Gertler et al. (2012); Wang (2012).

> 2See for example Kane (1994); Blau (1999); Keane and Wolpin (2001); Carneiro and Heckman (2002); Cameron and Taber (2004); Akee et al. (2010); Lochner and Monge-Naranjo (2011); Dahl and Lochner (2012); Macours et al. (2012); Caucutt and Lochner (2012).

3The effects of credits constraints on consumption choices is investigated by Hanushek (1986); Altonji and Siow (1987); Paxson (1992); Morduch (1995); Case and Deaton (2001); Karlan and Zinman (2010); Dupas and Robinson (2012); Kaboski and Townsend (2012).

> 4Research on the effects of intrahousehold shifts in power over income includes Duflo (2000); Qian (2008); Agnew et al. (2008); Ashraf (2009); Ashraf et al. (2010).

> 5Work on the effects of parental absence and household composition includes Blau and Grossberg (1992); Angrist and Johnson (2000); Lang and Zagorsky (2001); Corak (2001); Gertler et al. (2004); Page and Stevens (2004); Ruhm (2004); Gennetian (2005); Lyle (2006); Booth and Tamura (2009).

> 6Migration certainly can affect households by other channels as well. In particular, economists have studied the effect of social networks and information flows on household decisions about finance and investment (e.g Jensen 2010; Alatas et al. 2012). This literature suggests that information on investment returns often passes through social networks and can substantially influence household savings and investment decisions. We abstract from these effects for this study because the overseas jobs are short-term, involve little social integration with people at the destination, and involve low-skill work unlikely to bring

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