An empirical analysis on the impacts of remittances on self-employment choice among youth-headed households in Uganda

Abstract

Even with government programs to promote entrepreneurial ventures, youth unemployment still remains high in Uganda at 13 percent in 2019/20 to 17 percent in 2021/22 compared to national average of 9 percent. Yet at the same time Uganda has recorded increases in remittances, thus this study examines impact of remittances (internal and external) on self-employment choice among youth-headed households in Uganda using the Uganda National Household Survey (UNHS) for 2019/20. The study employs the Propensity Score Matching methodology to address the endogeneity methodological issues that characterize analysis of the remittances. The average treatment effects for the overall households, female, male, urban and rural were estimated using Gaussian kernel matching. The statistically significant coefficients of the ATT show for all the samples a negative impact on the likelihood of self-employment among remittances recipient youth household heads. Considering ATT, the results are negative and statistically significant in the full model showing that youth household heads receiving remittances have a considerably lower probability 0f 7 percent to establish their own business, compared to the non- receiving youth headed households. On disaggregation by gender, male headed youth households receiving remittances also have a 10.9 percent less probability of being self-employed compared to the non-recipients although results were not significant for the female sample. The results are also negative and significant for both rural and urban with a 6 percent and 9 percent less probabilities of being self-employed and receiving remittances among youth heads respectively. Therefore, that recommends government to prioritize the urban youth household heads during employment creating initiatives and programs since they are more less likely to engage in self-employment activities while receiving remittances compared to recipients in the rural areas