Remittances, Income Distribution, and Rural Asset Accumulation
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This paper examines the direct, first-rounds impact of two types of
remittances—internal and external remittances—on income distribution and asset
accumulation in rural Pakistan. Using income decomposition techniques on a three-year
panel household data set, the paper finds that internal remittances have a positive
effect on equity and that external remittances have a negative effect. The study also
uses an asset-accumulation model to pinpoint the effect of remittances on five types of
rural assets: irrigated land owned, rainfed land owned, livestock assets, agricultural
capital, and nonfarm assets. The results show that remittances do have an effect on
rural asset accumulation. While external remittances have a positive and significant
effect on the accumulation of land, internal remittances have a positive and significant
effect on the accumulation of agricultural capital.