Impact of Worker’s Remittances, Financial Development, and Economic Growth on Living Standard of Pakistan

Abstract

Plethora of studies have drawn conflicting conclusions about the relationships between workers’ remittances, financial development and growth, and living standards in different setups but partially. For this purpose, the capital conduit effect and threshold conduit effect are frequently utilized to trace out the transmission channels for causal linkages. This study extends the capital conduit and threshold channels to look at how worker remittances affect living standards. The data is taken from 1980 to 2020. The augmented Dickey-Fuller test was used to look at the stationarity of the data series. For both short-run and long-run consequences, ARDL-bound testing is employed. The study's findings suggest that, when taking into account the effects of financial development and GDP growth, there is a direct and indirect, short-term and long-term relationship between worker remittances and living standards. Additionally, it is confirmed that the path's extension has made a considerable contribution. These results may help policymakers comprehend the part that worker remittances play in the creation of financially sound plans.