EVALUATING THE EFFECTS OF EXTERNAL REMITTANCES ON LABOUR FORCE PARTICIPATION IN PAKISTAN: EVIDENCE FROM PANEL DATA TECHNIQUES

Abstract

Developing economies like Pakistan are facing slower economic growth. Lower labour force participation may be responsible for this slower growth.  So, economists take an interest in finding the factors affecting it. This study analyzes household behaviour in labour force participation after having received remittances in the case of Pakistan. For this purpose, the study uses pooled data estimated from Pakistan Social and Living Standard Measurement Surveys for the period 1998/99 to 2018/19. The study applies the Generalized Methods of Moment (GMM) approach to explore the effects of remittance on labour force participation. The results show that labour force participation (LFP) of left-behind household members is inversely related to remittances. It is also inversely associated with education and positively related to gender parity. Policy implications are that the Government should provide such incentives to the households receiving remittances and the educated people so that they could become a part of the labour force. Moreover, the Government should also focus on female education to increase gender parity.

JEl classification: I22, F24, D10, D63, J21.