Construction of Household Welfare Index and Welfare Impact of International

This paper mainly focuses on the construction of a household welfare index to examine 12 the welfare impact of remittances in rural Bangladesh. This paper, in achieving this objective, 13 uses primary data and several methods. This paper constructs a household welfare index 14 newly to measure household welfare. Besides, a linear regression and Chi-square test is used 15 to estimate the welfare and poverty impact of international remittances, respectively. 16 Remittance receiving households enjoy the higher level of welfare more than non-recipient 17 households in the study area. Household welfare is augmented by 0.116 if the household is 18 under the shade of international remittances. A significant influence of international 19 remittances on the reduction of household poverty is also found in this study. Therefore, this 20 paper suggests policymakers for utilizing remittances as a significant tool to improve 21 household welfare and to reduce household poverty. 22


Relationship between Remittance and Welfare
People migrate to well-off states and remit their earnings that directly increase the level 52 of income of their families. With that income, households meet up their daily basic needs, 53 and invest in some productive sectors, which ultimately enhance household welfare. This 54 mechanism is presented in Figure 1.  The linkage between personal remittance received and household consumption 75 expenditure od Bangladesh is stated in Figure 2. The figure reveals that the flow of both 76 remittances and expenditure is found stable and paralel to the horizontal axis up to 1995. 77 Beyond that period, consumption expenditure decreases at a little bit and remittance increases. 78 Remittance starts to fall down again after 2014. Therefore, it is found that there is no 79 unidirectional linkage between them. and consumer asset accumulation, especially in rural areas, but no impact on productive 90 assets is also found. Remittance receiving households expense on consumption, health, 91 education, vehicles, and the level of household savings largely (Thapa and Acharya, 2017 and 92 Awan et al., 2015), thus, they enjoy a better life than remittance non-recipient households 93 (Borici andGavoci, 2015, andHameli andBytyqi, 2018). On the other hand, Cuong (2008) 94 found an opposite direction: the impact of international remittances on income is greater than 95 consumption expenditures, meaning that a large proportion of international remittances are 96 used for savings and investment purposes. Javed et al. (2017) found that the effect of 97 international remittance on food security is greater than on wealth.  These findings reveal that the influence of international remittances is not unidirectional 110 which stresses to investigate a further study in the context of rural Bangladesh focusing these 111 gaps. Therefore, the core contribution of this paper is to construct a new household welfare 112 index to explore the welfare impact of international remittances in rural Bangladesh.

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As the study area this study selects Naogaon district because it is one of largest district in 117 terms of migration from where a large number of workers migrate abroad every year. Using

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This study uses frequency distribution and t test in analyzing the socio-economic features 126 of respondents, and the estimated result is shown in tabular form. used to rank households welfare. As this index is constructed with five indicators, five 136 distinct indices are constructed to calculate HWI which are as follows:

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This study uses Household Welfare Index (HWI) to measure welfare of households.

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To examines the welfare impact of remittances, this paper forms a linear function as 156 follows: Where, HW i , dependent variable, is welfare of i th household measured through the 159 Household Welfare Index and P i is a set of independent variables. To investigate the 160 relationship between dependent and independent variables, this study uses a multiple The equation 8 simply can be written in matrix form as: Therefore, the specified multiple regression model can be written as: where, δ 0 …..δ 8 are parameters and ϵ i is the error term. The independent variables used in 170 regression function are described in Table 1 Table 2 shows the mean value and mean difference, tested by t test, of some 189 socio-economic charecteristics of the households who received remittances and who did not.

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Per capita household expenditure on food and non-food items, housing, education, health, 196 and investments are analyzed through t test and the finding is presented in Table 3.    Table 3 also 210 shows that remittance receiving households expense more than remittance non-receiving 211 households in all purposes except education, which interprets no influence of remittances on 212 education. This study finds the the value of welfare of remittance receiving households by 0.52 and 220 remittance non-receiving households by 0.43. This interprets that households who received 221 remittance enjoy a moderate level of welfare and households who did not receive remittance 222 enjoy the lower level of welfare. Besides, a lower level of welfare (0.45) for all households is 223 found in the study area. From this analysis, a significant impact of remittances is found on 224 welfare in the study area.

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The level of household welfare (lower, moderate, and higher) of both remittance 226 receiving and non-receiving households is presented in Table 4.

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In measuring the welfare impact of remittances, a linear regression model is used. This is 239 analyzed with Stata14.2 and the result is displayed in Table 5.   (2017) and Nawru et al.

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The value of household welfare will be increased by 0.000002 if the per capita income of 277 a household is increased by one Taka. This finding is significant at 10 percent significance 278 level and can be explained in a way that high income households can expense as many as

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Chi-Square test for examining the poverty impact of international remittances is analyzed 283 through SPSS 23 and the estimated finding is shown in Table 6.   Table 6 shows that among 84 remittances recipient households, only 5 households are

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This paper mainly investigated three distinct research problems: comparative levels of 298 household welfare of both remittances receiving and non-receiving households; household 299 welfare and poverty impact of international remittances. To elaborate these questions with 300 some interesting findings, I used primary data and several methods.

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First, I found the moderate ( 0.45) level of household welfare aggregately in the study 302 area. I also found that welfare is highly enjoyed by the remittance receiving households than 303 the non-receiving households. Second, I found that welfare increases by 0.116 when a 304 household receives international remittances. Finally, I found a statistically significant impact 305 of remittances on poverty reduction.

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Therefore, this study suggests policymakers for taking policies which are beneficial for 307 receiving more remittance and for utilizing remittances in productive purposes so that it may 308 help in enhancing welfare and reducing poverty. The author of this paper expects that the 309 findings of this study may be beneficial to the policymakers and remittance recipient