Comparative Analysis of Remitted and Non-Remitted Households’ Budget Allocation to Food and Non-Food Items in Pakistan

Remittances and households

Abstract

Globalization has expanded labor market interconnectedness, and countries are striving to take advantage of this opportunity by sending their work force to countries where labor is in demand. On the other side, unfavorable events such as COVID-19 can impose restrictions such as lockdowns, travel bans, and social distance, all of which have caused problems for migrant workers and reduced remitted household budget allocation. Using the two-sample t-test and the PLSM 2014-15 dataset, this study compares the budget allocation of remitted and non-remitted households to food and non-food items. In addition, the distribution of remitted households by province and region, as well as remittance sources also determined. The results show that the Punjab province has the highest percentage of remitted households (51%), while Balochistan has the lowest percentage (1.4%). Furthermore, in Punjab, Bank is the most common channel of receiving remittances, whereas Hundi is in Khyber Pakhtunkhwa. The results of a two-sample t-test show that between remitted and non-remitted families, there is a significant difference in mean monthly budget allocation to food and non-food items. Remitted households spend more on food, education, health, and gas usage than non-remitted households on a monthly basis. As a result, the study suggests that increasing job opportunities both inside and outside Pakistan could be a viable policy option for increasing remitted and non-remitted household budget allocation. Enhancing bank remittances channels could be a viable policy option for increasing remittances and consequently increases households' budget allocation to food and non-food items.