Impact of Internal Remittances on Labour Participation and Employment Choice in Pakistan

Abstract

This study examines internal remittances’ effects on Pakistan’s labour market outcomes. The study utilises data from the Pakistan Social and Living Standard Measurement – Household Integrated Economic Survey (PSLM – HIES 2018-2019). The study uses Logit and Multinomial Logit models to estimate the effect of internal remittances on labour participation and employment choices. The study’s findings suggest that individuals from households receiving internal remittances are less likely to participate in the labour market than those from households that do not receive remittances. Moreover, internal remittances lower the likelihood to participate in the labour market. Amongst the labour participating, the individuals of remittance-receiving households are more inclined to participate in farming vis-à-vis non-receiving individuals. It is also observed that a rise in remittances results in a greater likelihood of farming activities. The study’s findings have important implications pertaining to understanding the entrepreneurial level and economic activities in remittance-receiving households.