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Remittances and Household Welfare: A Case Study of Pakistan

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Author Info

  • Ahmed, Vaqar

    (Planning Commission of Pakistan)

  • Sugiyarto, Guntur

    (Asian Development Bank)

  • Jha, Shikha

    (Asian Development Bank)

Abstract

This paper examines the impact of remittances on economy and household welfare in Pakistan by using a general equilibrium framework and microeconometric analysis. The first approach is to highlight the macroeconomic and sectoral effects of a reduction in remittances, while the second is to show how remittances decrease the probability of being poor and affect the household consumption expenditure and hence poverty. The findings suggest that reduction in remittances will reduce gross domestic product, investment, and household consumption, which in turn will increase poverty. On the other hand, the probability of households becoming poor decreases by 12.7% if they receive remittances. The poverty headcount ratio and Gini coefficient decline by 7.8% and 4.8%, respectively, for household-receiving remittances. Given the important role of remittance, the key challenge for the government is to provide incentives to attract more remittances sent through formal channels and ensure their productive use.

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Bibliographic Info

Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 194.

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Length: 50 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:ris:adbewp:0194

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Related research

Keywords: International Migration and Remittances; Household Welfare; Poverty; Inequality; CGE Model; Microeconometrics; Pakistan;

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Cited by:
  1. Kumar, Ronald/R, 2011. "Role of Trade, Aid, Remittances and Financial Development in Pakistan," MPRA Paper 38871, University Library of Munich, Germany.
  2. Kumar, Ronald R., 2011. "Role of Financial and Technology Inclusion, Remittances and Exports vis-à-vis growth: A study of Nepal," MPRA Paper 38850, University Library of Munich, Germany, revised 17 May 2012.
  3. Junaid Ahmed & Mazhar Mughal, 2014. "How do consumption patterns of foreign and domestic remittance recipients and non recipients compare? Evidence from Pakistan," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 160, Courant Research Centre PEG.

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