Impact of expatriate remittance on the socio-economic status of

families
Introduction: Emigration is one of the most important issues in the contemporary
global economy. It is estimated that over 110 million people now reside outside the
country of their birth (United Nations, 2002). This clearly has major economic and
political implications for both the sending and receiving countries. Coppel et al. [29]
identify four major consequences of international population movements. There are more
than 215 million1 international migrants in the world.Pakistan has experienced migration
due to several motives: political, religious, social and economical, making it a unique
case to study. One of the economic results of migration is remittances i.e. the transfer of
money from family members abroad to their relatives in Pakistan.This paper analyses the
impact of expatriats remittance on the socio economics status of families of Pakistan.
Firstly, there is the e_ect that emigration has on the host countrys labor market. Although
the possible adverse effects that emigration can have on the wage and employment levels
of natives are typically examined, emigration may also have a role to play in reducing
skill shortages in certain key sectors of the economy. Secondly, emigration is likely to
influence the budgetary position of the receiving country since the amount recent arrivals
receive through health, education and welfare systems is unlikely to exactly balance the
increased tax revenues from new workers. Thirdly, it is argued that emigration may be a
solution to the ageing population problem that faces many OECD countries. Finally,
emigration can have a major economic impact on the source country. These effects can
either be negative, in terms of brain drain (though a brain drain can be beneficial if it
creates incentives for human capital investment in the source country), or positive since
migrants remittances are thought to be an important economic development tool for
many labor exporting countries. Also, in an integrated world economy an increase in the
growth driven by innovation benefits for everyone. The overall balance of these e_ects is
therefore likely to have a major influence on the emigration policies that are
implemented,both in the source and host countries. Pakistan has recently experienced a
new peak in both the outflows of its workers and the inflows of foreign remittances. In
2008, approximately 430,000 workers went abroad, primarily to the Middle East, and in
2008-09, remittances reached a new peak of more than USD 7 billion. The expriates of
Pakistanis to the United Kingdom and to North America is different from their movement
to the Middle East. The former is permanent in nature, except for those travelling on a
student visa or temporary stay permit, while migration to the Middle East is mediumterm, lasting for four or five years on average.
The choice of destination country is influenced mainly by the ease of access to the job
market, the wage structure and the nature of the job.

 Literature review: There is a growing body of literature in recent years that has

examined the economic effects of expatriates remittances. These studies serve to

underscore the increasing importance of remittances provided by expatriates from
developing countries working in other countries. For instance, Scholars
emphasizes the growing importance of remittances as a source of external funds
for developing countries. Edwards examine the effect of expatriates remittance on
education and report that remittances have an important effect on school retention.
The empirical evidence on the effect of expatriates remittances on economic
growth, poverty, and income inequality has shown mixed results. For instance,
other scholars, covering 113 countries found that remittances had a negative effect
on growth. There is a considerable body of literature on the economic and social impacts
of workers migration and remittances on Pakistani society. This literature shows the
considerable contribution of remittances to the countrys economic growth through
investments, balance of payments, poverty reduction and the improvement of the socioeconomic status of expatriates-sending households. However, most of the literature was
produced in the 1980s. There is a dearth of empirical evidence of the contribution of the
recent significant inflows of remittances on both the economy and the households
concerned. The effect of the recent global financial crisis on overseas expatriates and
remittances is also unknown. One view is that South Asian expatriates are concentrated in
the Gulf States, where public investments are foreseen to remain strong in spite of the
drop in oil prices. The economies of major labor importing countries in the region are
therefore expected to have stable growth (Abella and Ducanes, 2009). The Gulf countries
have not significantly reduced their hiring of migrants (Ratha et al., 2009). The
expatriates of South Asian workers, including Pakistanis to the Middle East, is therefore
likely to have been only partially affected by the global downturn. Both the outflows of
workers to the Middle East during the first half of 2009 and the inflows of remittances
have shown that there has been no sign of a decline in the demand for Pakistani
expatriates. The same is the case in other South Asian labor exporting countries,
including Bangladesh, India, Nepal and Sri Lanka. According to the Migration and
Development Brief 10 of the World Bank, falling asset prices, rising interest rate
differentials and the depreciation of the local currencies in South Asia and East Asia have
also attracted remittances from migrants. Interestingly, the qualitative information
collected for the present study shows that the majority of migrant households perceive a
decline in the future flows of remittances. The overall objective of the present study is to
assess the economic and social impacts of remittances on expatriates-sending households
in Pakistan. It is based on the Household Survey on Overseas Migrants and Remittances
(HSOMR), a survey of households with a migrant family member working in other
countries. Since the 1970s, many countries have hosted Pakistani workers on a large
scale. Although the United Arab Emirates has recently started importing more Pakistani
labor than Saudi Arabia has, the latter still has the largest stock of Pakistan expatriates,

which includes unskilled, skilled, service and professional workers. Thus, by focusing,
the present study examines the largest stock of Pakistani migrant workers in the Middle
East. It is estimated that, in 2004, approximately 4 million Pakistanis were abroad; about
half (48%) were in the Middle East, with a concentration in Saudi Arabia and the United
Arab Emirates. Europe and North America were the destinations of 28 per cent and 21
per cent of Pakistanis going overseas, respectively (annex table A.1). In Europe,
Pakistanis are concentrated in the United Kingdom of Great Britain and Northern Ireland.
The expatriates of Pakistan to the United Kingdom started at the end of the Second World
War, when a significant number of seamen from Mirpur (a district in Azad Jammu and
Kashmir) found themselves stranded in the United Kingdom as a result of having their
ships torpedoed. Migration from Mirpur and other surrounding districts continued until
the 1960s. A wave of migration to North America started in the early 1990s, when young
men moved initially for higher education, and many settled there afterwards with their
families (Gazdar, 2005). The expatriates of Pakistan to the United States of America and
to Canada for settlement has gradually increased. It is estimated that 600,000 Pakistanis
were in the United States in 2004.
The migration of Pakistanis to the United Kingdom and to North America is different
from their movement to the Middle East. The former is permanent in nature, except for
those travelling on a student visa or temporary stay permit, while migration to the Middle
East is medium-term, lasting for four or five years on average. The job market in the
Middle East has shown great fluctuations in terms of the placement of Pakistani workers.
The first peak was observed in 1977, and there was another in 1981. However, annual
placement was well below 100,000 between 1984 and 1989. After the 1990 Gulf War, the
placement of Pakistanis reached a record level of 195,000, but the number was low in the
second half of the 1990s. For the more recent period of 2001-2008, the annual placement
of Pakistanis in the Middle East. The placement numbers increased from 123,500 in 2001
to 209,000 in 2003. After a decline during the next two years, it reached 287,000 in 2007.
A new peak was observed in 2008, when 430,000 workers went abroad. The placement of
Pakistanis in Saudi Arabia has also fluctuated; the number declined from 126,000 in 2003
to about 85,000 in 2007. But in 2008, 138,000 workers found employment there. It is
beyond the scope of the present study to examine in detail the reasons for the fluctuations
in the placement of Pakistani workers in the Middle East, but the commonly stated
reasons are: the shift in demand from infrastructure development after the completion of
projects to the maintenance sector; competition from other labor-exporting countries; the
policy of Arab countries to hire their own nationals; and the uneducated labor force of
Pakistan.
Socio economic status: Socio economic status refers to the social and economic position
of a group or a society to which people belong. The term socio economic is complex one
and it is determined by combined effect of many factors. These factors may be social as

well as economic. These factors are differing in different societies along with their norms
and values. In this research the researcher has selected all the variables by which we can
measure socio economic status like residence, education, income, education, food,
clothing, health status and marital status are include in socio economic status.
Indicators of Socio economic status
1. Residence
2. Income
3. Education
4. Living standards
5. Food
6. Clothing
7. Health facilities
8. Daily eatables
Remittance: Remittance refers to that money which is sending from emigrant to his
family and home in the form of cash or goods that is greatly influenced on their standards
of living or may be improved their standards of living. These transfers are known as
workers migrant remittances. They have been growing rapidly in past few years and now
represent the largest source of foreign income in many developing countries.
Indicators of remittance
1. Cash
2. Hundy
3. Drafts
4. In the form of goods
5. Foreign currency

Problem Statement:
During the last few years, the rate of expatriates remittance has increased effecting the
socio-economic status of the families in Pakistan. There could be favorable policies of
other countries for the Pakistani expatriates or other influencing factors for the
remittances.

Hypothesis:
H1: Economic differentials and low costs and risks: The first hypothesis is that
in line with neo-classical or equilibrium theory Pakistanis migrate to

other countries due to the economic differentials in terms of wages and

employment conditions between the two countries and the perceived low
risks and costs attached to migration to this area.
H2: Migration as a family decision: A second hypothesis is that the nature of
Pakistani society precludes the possibility of migration as an individual
decision. Rather, migration follows a pattern of strategic behavior
undertaken by families and households. Thus, the decision to migrate is
made by the family, not the individual, as part of a family survival.
This hypothesis was confirmed by the research findings. In a few cases the
decision to migrate was initiated by the individual who later migrated, but
in all cases it was sanctioned by the whole family. The choice of
destination is made on the basis of information provided by migrants in
other countries.
H3: The choice of the migrant: Assuming that the previous hypothesis is
correct, it is suggested that the choice of the family member who
migrates initially is made on the basis of the individuals ability/capacity
to travel and establish himself abroad and to generate income to share
with the family members remaining in Pakistan. This hypothesis was also
corroborated by the research. It seems that it is always a man who first
migrates.
H4: Migration networks: This hypothesis is that the existing migratory flow
continues to expand on the basis of networks where kinship and other
social relations play a major role. These networks constitute a social
capital that offsets risks and costs. This is in accordance with cumulative
causation theory, which suggests that each migratory movement makes
subsequent movements more likely, in that each migrant is part of a
network.

Significance of the study: Sociologically the present topic becomes significant

because of the reason that the foreign remittance significantly affects the socio-economic
status of a family. Various socio-economic push and pull factors obliged large man power
to leave their countries, mostly leaving their families (wives and children) and other aged
people behind in the hope of a better social status and economic future for themselves
and for their families. One major factor in emigration is search for better employment
opportunities and economic prospects.
The study contributes to the research that the expatriates will often do jobs that people in
the host country will not, or cannot do, expatriates often work longer hours and for lower
salaries, and while that is controversial, sometimes exploitive, it benefits the host
country; Immigrants, when made to feel welcome in the host society, can contribute to
the diversity of that society, which can help with tolerance and understanding.
Research Methodology: This research aims to understand the impact of expatriates
remittance policies and its effects on their families. Given the nature of the study undertaken, it is
an exploratory research.

Research design: This research is interpretive in nature based on mixed methodologies with existing
statistics. For the purpose, the year wise expatriates remittances record was retrieved.

Sampling technique: The technique used for the selection of the sample
was the snow ball technique.
Sampling technique (also called network, chain referral, or reputation
sampling) is a method for identifying and sampling (or selecting) the in a
network. It is based on an analogy to a snowball, which begins small but
becomes larger as it is rolled on wet snow and picks up additional snow. Snow
ball is a multistage technique it begins with one or few people or cases and
spread our on the bases of links to the initial cases. (Neuman, page: 207)
Sample size The researchers decided to have a sample of 100 households
by using Snowball sampling technique.