Migrant transfers and on-farm investment under climate stress

Rural households in Vietnam’s Central and Central Highlands provinces experience recurrent climate hazards that complicate time-sensitive purchases of seeds, fertilizer, land preparation, irrigation, and hired labor. At the same time, rural–urban and international migration generate remittance inflows that may alleviate short-term liquidity constraints. This study examines whether remittances increase farm input expenditure in normal years, whether climate shocks reduce such expenditure, and whether remittances mitigate shock-induced cutbacks. This analysis utilizes three waves of the Thailand–Vietnam Socio-Economic Panel (2013, 2016, and 2017) for Ha Tinh, Thua Thien Hue, and Dak Lak. Models are estimated using village-by-year leaveone-out (LOO) instrument averages of other households’ remittances as a network shifter, and household fixed effects are included to account for time-invariant heterogeneity. The results indicate that remittances increase input spending, whereas climate-related losses reduce it. Furthermore, the marginal effect of remittances diminishes as losses increase. These patterns remain robust when accounting for province-by-year shocks and alternative instrument specifications. By focusing on farm input expenditure as the immediate link connecting liquidity, risk, and productivity, this study offers policy-relevant evidence for climate-vulnerable, migration-active regions. These insights highlight that reducing frictions in money transfers and offering timely, short-term liquidity around input periods can improve the productive use of remittances, while also helping to preserve their role as insurance.