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Remittances and Household Welfare: A Case Study of Pakistan

Vaqar Ahmed (), Guntur Sugiyarto and Shikha Jha
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Guntur Sugiyarto: Asian Development Bank
Shikha Jha: Asian Development Bank

No 194, ADB Economics Working Paper Series from 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.

Keywords: International Migration and Remittances; Household Welfare; Poverty; Inequality; CGE Model; Microeconometrics; Pakistan (search for similar items in EconPapers)
Pages: 50 pages
Date: 2010-02
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