The Impact of Remittances on Household Welfare in Pakistan: Evidence from HIES 2018–19 and PSLM 2019–20

Abstract

This study investigates the impact of international remittances on household welfare in Pakistan using nationally representative microdata from the Household Integrated Economic Survey (HIES) 2018–19 and the Pakistan Social and Living Standards Measurement (PSLM) 2019–20. Employing Ordinary Least Squares (OLS), Probit, and Propensity Score Matching (PSM) techniques, the analysis examines three welfare dimensions—per capita consumption, poverty status, and asset ownership—while accounting for demographic and regional heterogeneity. Results reveal that remittance-receiving households spend 18–21 percent more on consumption, face an 8 percent lower probability of poverty, and exhibit reduced income inequality relative to non-recipient households. The effects are stronger among rural and female-headed households, highlighting the redistributive role of remittances. These findings are consistent with the New Economics of Labor Migration (NELM) framework and underline the importance of remittance flows as informal insurance and poverty-alleviation mechanisms. Policy recommendations include expanding digital-financial access, lowering transfer costs, and linking remittances to productive investments.