Abstract
We investigate the impact of international labour migrants’ remittances on household expenditures in Uzbekistan as an understudied case of South‐South migration. In doing so, we use instrumental variable regressions to address endogeneity caused by self‐selection bias. We find that remittance‐receiving households spend a significantly smaller part of their budgets on food and health. This finding contrasts with studies of South‐South remittances in Africa that find that households tend to spend most of their remittance incomes on food. Our estimations also provide evidence that remittance‐receiving households spend a larger part of their total expenditures on non‐food consumption. Remittances’ impact on healthcare expenditures is negative and on education expenditures is insignificant. These results support the view that remittances in this South‐South migration corridor are channelled mainly to consumer goods, limiting their contribution to economic development.