Navigating Poverty: The Role of Internal Migration and Remittances in Pakistan

Abstract

Internal migration and remittance inflows play a critical role in shaping the socio-economic dynamics of households, particularly in developing countries like Pakistan. Understanding the factors driving migration and the subsequent impact of remittances on poverty is essential to designing policies that effectively address poverty and improve living standards for vulnerable populations. This study investigates the factors influencing the incidence of internal migration and compares poverty levels between households that receive internal remittances and those that do not. Additionally, it assesses the impact of remittance inflows on the poverty status of recipient households. The research utilizes data from the Pakistan Social and Living Standards Measurement–Household Integrated Economic Survey (PSLM – HIES 2018-2019). A logistic regression model was employed due to the binary nature of the dependent variables. The regression analysis identified various demographic factors of household heads and household characteristics that impact the incidence of internal migration. The analysis shows that households receiving internal remittances are less likely to be in poverty compared to those who do not receive remittances. The empirical analysis reveals a significant inverse relationship between the amount of monthly remittances received and the probability of household poverty. It also shows that remittances equivalent to the minimum wage can reduce the poverty incidence to below forty percent. The insights from this study are vital for the formulation of targeted social and economic policies aimed at harnessing the potential benefits of remittances in mitigating poverty among migrant-sending communities.