Microeconomic impact of remittances on household welfare: Evidences from Bangladesh

This paper investigates effects of both international and domestic remittances and migration on household welfare in Bangladesh. We employ a number of variables such as different types of poverty measures, household consumption expenditure, expenditures on health and education, food calorie intake etc. to define household welfare. We use the Bangladesh Household Income and Expenditure Survey 2010 data to estimate impact of remittances on household welfare. To address the issue of self-selection associated with migration decision and thus scope for receiving remittances, we have used the Propensity Score Matching (PSM) technique. The econometric results reveal that although both internal and external remittances have statistically significant impact on reducing poverty and increasing consumption expenditure, the degree of impact is much higher for external remittances compared to internal remittances. However we find no impact of remittances on household expenditure on education and health care. Given subsidized public provision of education and healthcare in the rural areas, remittance-recipient households may need not spend higher amounts compared to non-remittance-recipient households, or they may not have sufficient scopes for spending more on human capital investments like education and health care.