Remittances and Labour Supply: A Case Study of Pakistan

Abstract

Remittances are playing an increasingly important role in the
economies of developing countries. This paper studies the effects of these
flows on Pakistan’s labour market. The 2007-08 Household Integrated
Economic Survey and Probit as well as Propensity Score Matching
techniques are employed to examine the impact of remittances on labour
participation, quantity of work, nature of work and activities as well as on
the non-active members of remittance-receiving households.
It is found that both foreign and domestic remittances tend to lower
labour supply of the recipient households. This impact is higher among the
women and youth in the rural areas relative to men, possibly due to the home
production activities of women such as child care etc., and the increased
likelihood of the young household members to pursue school education.
The paper also examines 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, the likelihood of being selfemployed and being own-cultivator is higher among remittance recipients