Remittances and agricultural productivity: the effect of heterogeneity in economic activity of farming households in Ghana

Purpose This paper aims to test the impact of remittances receipt on agricultural productivity. The paper empirically assesses whether heterogeneity in economic activity of farming households affects the effects of remittances on productivity of tradable and nontradable crop farming households in Ghana. Design/methodology/approach The authors employ propensity score matching (PSM) methods to address potential endogeneity issues that could arise from the estimation due to selection bias. This paper uses the seventh round of Ghana living standard survey dataset for Ghana. Findings The authors find that, the involvement of farming households in other economic activities alters the impact of remittances on crop yield. This differential impact also varies according whether the crop is tradeable or not. Practical implications Policy can reduce the cost of sending remittances and include financial literacy modules in the farmer training modules to increase farmers' knowledge on investment of remittance in agricultural production. Originality/value The authors distinguish the paper from others by controlling for crop types (particularly tradeable or otherwise and gestation period), farming of a second or more crops and engagement of smallholder farmers in nonfarm economic activities.