Using two of the constructed matched samples as examples, Figure 2 illustrates the significant reduction in differences between the treated and control groups achieved through the matching exercise. It reports the standardized bias for each variable, before and after the matching exercise. Whereas the two samples vary significantly across characteristics prior to matching, propensity score matching results in samples with very low bias for each variable. Similarly, Table 2 reports the χ<sup>�</sup> statistic and corresponding p-values from a likelihood ratio test on the joint significance of all variables regressed on the propensity score. The results support the model used for each data universe at the 95 percent confidence level.

**Table 2.  Balance property test results of likelihood ratio test, by data universe**

|||El Sa|lvador|Guatem|ala|Hond|uras|
|---|---|---|---|---|---|---|---|
|Universe||2006|2014|2006|2014|2006|2014|
|Wki|LR chi2|21.60|15.42|19.69|4.56|13.94|1.66|
|orng age|p>chi2|0.09|0.35|0.14|0.99|0.45|1.00|
|Lb f|LR chi2|2.19|5.00|6.69|1.12|5.81|0.48|
|aor orce|p>chi2|1.00|0.99|0.95|1.00|0.97|1.00|
|Eld|LR chi2|1.99|5.17|6.69|0.90|5.79|0.49|
|mpoye|p>chi2|1.00|0.98|0.95|1.00|0.97|1.00|

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

# Findings

Remittances can impact different dimensions of labor supply: 1) the extensive margin – the extent to which remittances impact who is working, and 2) the intensive margin – the extent to which labor intensity is affected by remittances. In particular, for the extensive margin we look at the impact of remittances on entry into the labor force and unemployment among all adults, and _nini_ status among youth. The intensive margin is assessed looking at informality, type of employment, and hours worked. The results are organized into two sections: the first considers the extensive margin of labor supply – participation and unemployment, while the second considers the intensive margin – employment outcomes.

## _Labor participation and unemployment_

Among working age adults, remittances are associated with lower levels of labor force participation in all countries and for both years analyzed (Table 3). In line with other results in the literature, the reduction in labor force participation associated with remittances is more pronounced among women than men, though evidence of drops in male participation rates is evident for both years in Guatemala and El Salvador and in 2006 in Honduras. As suggested from Table 1, participation seems particularly affected by remittances in El Salvador. The difference in participation rates between recipients and non-recipients is largest among Salvadoran women (17.5 percentage points in 2006) and smallest among Honduran men in 2014 (1 percentage point, a difference not statistically different from 0). The results also suggest a change between 2006 and 2014 in how remittances affect participation in Honduras: while the negative effect on participation for men fell and lost statistical significance, the effect on women increased by 3 percentage points.

As discussed above, remittances are hypothesized to decrease labor supply by increasing the reservation wage. This could be reflected in increases in unemployment (as individuals use remittances to finance longer job searches) as well as decreases in participation (as discouraged workers who are unable to find work at their reservation wage stop searching). If remittances are used to finance more home production in a welfare-increasing reallocation, then we would expect to see no change in the likelihood of being unemployed along with a decrease in the participation rate as individuals exit the labor force and specialize 9