Do External Remittances Create More Wealth? A Comparative Analysis of Pakistani Households

Abstract

This study examines whether the source of remittances matters for household wealth in Pakistan. Using nationally representative PSLM 2019–20 data, it compares households receiving external (international) remittances with those receiving internal (domestic) remittances and further explores differences across provinces and urban-rural settings. The results show that households receiving external remittances enjoy significantly higher wealth levels and stronger asset ownership than internal remittance households. This advantage remains robust across multiple OLS specifications. The impact is strongest in Punjab, Sindh, and urban areas, while comparatively smaller but still positive in Khyber Pakhtunkhwa, Balochistan, and rural regions. These findings suggest that external remittances provide more stable and higher-value financial support, enabling better wealth accumulation. Overall, the study highlights the importance of remittance type in shaping household economic wellbeing and underscores the need for policies that enhance productive use of remittances and address regional disparities in Pakistan.

Keywords: External remittances; Internal remittances; Household wealth; Pakistan; Regional heterogeneity