International Remittances, Household Welfare, and Women Empowerment: Evidence From Bangladesh

Introduction

The mobility of human beings is the fact of life. People move to survive sometimes voluntarily and sometimes by force and this movement is called migration. People who migrate are called migrants. Migration may be happened both within and outside the country. The basic decision of a person’s migration is made by many reasons like unemployment, nepotism, religion, racial clash, law and order situation, desire to uplift the standard of living, and so on (Todaro and Smith, 2012). These migrants are now living and working abroad and sending their earnings to their families in home countries either in the form of goods or cash, known as remittance (Kumar et al. 2018). Bangladesh is one of the largest labor exporting countries which exports huge human resources abroad and receives remittances every year. The wave of migration from Bangladesh started in the 1970s when countries from the Gulf region started for looking toward cheap labor exporting countries. According to the Household Income and Expenditure Survey 2010, about 8.7 million households depend on remittances in Bangladesh. This remittance helps households in many ways. It generates employment opportunities, empowers women, increases savings and investment rates, improves the balance of payments, and reduces poverty, and so on (Kumar, 2019c; Adams, 2005 and Bruyan 2005). Remittance in Bangladesh is utilized on consumption, investment, or savings and for charity or community initiatives which plays a crucial role in improving the standard of living. However, the relationship between international remittances and household welfare (household consumption expenditure) is not clear in Bangladesh's perspective stated in Figure 1.

Figure 1.

Relationship between remittances and consumption expenditure

Source: World Development Indicator

Figure 1 reveals that both remittances and consumption expenditure remain the same until 1995. From 1995, consumption expenditure starts to decrease at a little bit rate while remittance starts to increase. Beyond, 2014 both remittance and household consumption expenditure starts to fall again where the rate of falling of remittances is greater than that of consumption expenditure. This scenario reveals that there is no specific directional relationship between remittances and household consumption expenditure. Therefore, an empirical investigation is required to carry out on this issue.

Welfare is an arguable issue because many countries required some kind of indicator to measure their economic, social, cultural, and environmental progress in the world. Many studies have used gross domestic product (GDP) to measure only economic activity of a country (Costanza et al., 2009 and Stiglitz et al., 2010) because the gross domestic product was never intended to quantify social or monetary welfare but nowadays it is the most generally used indicator for representing human welfare (Marcuss and Kane, 2007). There is considerable evidence in the economic literature that remittances are the direct link of economic welfare in the home country.

In the new economics of labor migration, Taylor (1999) argued that migration is the plan of a household for different income enhancing strategies, and remittance is the tool that helps the household to overcome income reducing difficulties. Remittance also creates a multiplier effect on income, employment, and production in the home countries. International remittances also influence the power of taking deciding for women in the absence of a man of the family. Here is the era of women empowerment. Most of the countries of the world are now empowering their women by involving them in decision making. Women empowerment refers to increasing the spiritual, political, social, educational, gender, or economic strength of individuals and communities of women (Narayan, 2002). Women empowerment has five components: women’s sense of self-help; their right to have and determine choices; their right to have access to opportunities and resources; their right to have the power to control their own lives, both within and outside the home; and their ability to influence the direction of social change to create more just social and economic order, nationally and internationally.