|Diff(p.p.)|0.043|0.042|0.069|0.099|0.036|0.044|
|---|---|---|---|---|---|---|
|Diff(%)|0.071|0.065|0.095|0.146|0.067|0.076|
|t-stat|3.36|3.71|5.04|5.12|3.03|1.81|

_Source:_ Authors’ tabulations using SEDLAC (CEDLAS and the World Bank).

Could remittances be associated with more job creation by financing self-employment and entrepreneurship? In El Salvador and Guatemala, remittances are associated with increased likelihood of self-employment (Table 6). In 2014, self-employment rates were 25.7 percent (from 28.7 percent to 36.1 percent) higher for those who received remittances relative to those who did not in El Salvador, and 40.9 percent higher in Guatemala. As in the analysis on informality, there is no evidence of a relationship between self-employment and remittances in Honduras. The likelihood of being an employer was higher for individuals who received remittances in El Salvador and Honduras than those who did not receive remittances. The share of working individuals who report being an employer among remittance receivers was 2.4 (El Salvador) and 3.6 (Honduras) percentage points higher than the control group. This is the equivalent of more than doubling the propensity to be an employer in El Salvador. No statistical relationship is found between remittances and employer status in Guatemala.

**Table 6.  Self-employment and employer rates, propensity score matching results**

|||<br>El Sa<br>|<br>lvador<br>|<br>Guat<br>|<br>emala<br>|<br>Hon<br>|<br>duras<br>|
|---|---|---|---|---|---|---|---|
|||2006|2014|2006|2014|2006|2014|
||Treated|0.348|0.361|0.419|0.377|0.306|0.309|
||Control|0.286|0.287|0.335|0.267|0.293|0.293|
|Self-employed|Diff|0.062|0.074|0.084|0.109|0.014|0.016|
||Diff(%)|0.219|0.257|0.251|0.409|0.046|0.056|
||t-stat|7.55|9.89|8.40|8.12|1.86|1.10|
||Treated|0.062|0.060|0.039|0.034|0.125|0.140|
||Control|0.043|0.035|0.038|0.024|0.106|0.104|
|Employer|Diff|0.020|0.024|0.001|0.009|0.019|0.036|
||Diff(%)|0.460|0.690|0.026|0.389|0.182|0.350|
||t-stat|4.80|6.79|0.25|1.89|3.71|3.30|

_Source:_ Authors’ tabulations using SEDLAC (CEDLAS and the World Bank).

One interpretation of these results is that remittances encourage small enterprises, either via selfemployment or through employer status, at the expense of employment in larger firms. Under this interpretation, remittances could be supporting lower productivity employment at the expense of employment in larger and presumably more productive firms. On the other hand, if there is insufficient demand from larger firms, remittances could be generating employment opportunities for individuals who are unable to secure better employment. In addition, if remittances reduce credit constraints of small business owners, they could lead to higher earnings for self-employed and employers. One check to see if remittances are encouraging lower productivity employment is to check for wage differentials between individuals who receive remittances and those who do not. This analysis was done for all employed workers, as well as for the self-employed and employers separately. The results do not reveal any statistically significant difference in average wage between individuals who receive remittances and those who do not (Annex Table A2). That is, there is no evidence that remittances are associated with lower productivity employment nor with higher earnings for small business owners.

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