We use original 2005 survey data from Fiji and Tonga on remittances and household income to estimate the combined impact of migration and remittances on the composition of household income. A two-stage methodology is followed. A variable for the predicted number of migrants in each household is generated to control for selectivity in migration. This variable is then used in a 3SLS remittances and income equation system. In neither country do we observe significant impacts on agricultural cash income, but, in relation to other income sources, including subsistence agriculture, wages and non-agricultural business activities, some significant and different effects are found, both positive and negative. These findings suggest that the duration and intensity of remittance-driven migration, and the structure of economic activity within a community are important in understanding the influences of migration and remittances on household resource allocation and production decisions and on the communityu27s economic transformation.
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