Impact of International Remittances on Poverty in Bangladesh: Evidence from Household Data

Abstract

Although the impact of remittances on poverty is a widely examined topic, only a few studies shed light on this issue at the household level, especially in the case of Bangladesh. This study compares households with and without remittance receivers to estimate the poverty impact of remittances on a regional basis. The dataset used for this study is the Household Income Expenditure Survey (HIES) 2010, obtained from a representative sample of 12,239 households, and collected by the Bangladesh Bureau of Statistics (BBS). Determining propensity scores from the estimation of probit regression, the average treatment effect on the treatment group has been estimated by using nearest neighbour matching and Kernel estimator. Both of the techniques confirm that receiving remittances has an inverse impact on households’ propensity of being poor. A regional comparison shows that this propensity is lower in urban areas (11.3 per cent) than the rural areas (16.3 per cent). In both urban and rural areas, per capita consumption expenditure and monthly consumption expenditure vary positively with remittance receipt of the households. Moreover, probit regression estimates that the probability of having migrant members in rural households is 2.8 per cent higher than that of urban households. On the basis of the major findings, the study reaches the conclusion that rural areas show more potential in terms of producing exportable manpower. Appropriate policy in terms of creating an enabling environment both in the destination and home countries should be arranged, especially to facilitate women migration.