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Labour effects of foreign and domestic remittances -- evidence from Pakistan

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  • Mazhar Mughal
  • Farid Makhlouf

Abstract

Remittances are playing an increasingly important role in the economies of developing countries. In this paper, we study the effects of these flows on Pakistan's labour market. We employ the 2007--2008 Household Integrated Economic Survey and Probit as well as Propensity Score Matching techniques to examine the impact on labour participation, quantity of work and activities of working as well as non-active members of remittance-receiving households. We find that both foreign and domestic remittances tend to lower labour supply of the recipient households. This impact is higher among women and among the young. The impact is more pronounced in the rural areas. In addition, foreign remittances increase the likelihood of household members attending middle school. We also examine the quantity of labour supplied by the remittance-recipient households. Results show little difference in the number of months and days worked between the households receiving and not receiving remittances. Furthermore, we find that the likelihood of being self-employed and cultivating one's own land is higher among remittance recipients. In sum, our analysis highlights a higher role of foreign remittances in the labour market as compared to internal remittances.

Suggested Citation

  • Mazhar Mughal & Farid Makhlouf, 2013. "Labour effects of foreign and domestic remittances -- evidence from Pakistan," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(6), pages 798-821, November.
  • Handle: RePEc:taf:irapec:v:27:y:2013:i:6:p:798-821
    DOI: 10.1080/02692171.2013.804495
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    References listed on IDEAS

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    1. David McKenzie & Hillel Rapoport, 2011. "Can migration reduce educational attainment? Evidence from Mexico," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1331-1358, October.
    2. Yan M Sun & Udo Kock, 2011. "Remittances in Pakistan; Why have they gone up, and why Aren't they coming down?," IMF Working Papers 11/200, International Monetary Fund.
    3. Mariapia Mendola & Gero Carletto, 2008. "International migration and gender differentials in the home labor market: evidence from Albania," Working Papers 148, University of Milano-Bicocca, Department of Economics, revised Dec 2008.
    4. Evans Jadotte, 2009. "International Migration, Remittances and Labour Supply: The Case of the Republic of Haiti," WIDER Working Paper Series RP2009-28, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. Adebayo Adedokun, 2015. "Invigorating foreign aid administration: remittances’ strategy, pro-poor and gender focus," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 1(1), pages 1-12, December.

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