Trend in Redistributive Effects Foreign Remittances in Pakistan in 2001-02, 2005-06 and 2010-11

Fouzia Jamshaid, Abdul Qayyum Mohsin & Ikram Ali Malik


A good chunk of factors affect the economic growth and distribution of income of the economy. Inflow of foreign remittance to developing economies is of prime importance. The purpose of the present study is to investigate the trend in redistributive impact of foreign remittances and compare the pre distribution of income of the households with that of post distribution over time in Pakistan. The study tested the hypotheses that the effect of foreign remittances on the distribution of income has been in favor of high income groups by comparing the HIESs 2001-02, 2005-06 and 2010-11. In order to quantify and compare the impacts, this study employed various techniques in line with the Gini coefficient, Lorenz curve, Ordinary Least Square and formal statistical Chow test. The estimated results of the study tend to support the hypothesis that foreign remittances deteriorated the distribution of income in overall Pakistan. For improving the distribution of income, policy makers may take a systematic approach to equip the lower and lowest income groups in order to enhance migration opportunities for them. Moreover, to reduce the migrants cost and risk, the government may establish migrants’ network in the host countries by providing financial assistance and guiding support to lower and lower income groups.

 Keywords:   Foreign Remittances, Trend in re-distribution of income, Pakistan, Gini coefficient, Lorenz Curve, Chow Test and Household Integrated Economic Survey (HIES)

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