The Impact of Remittances on Labour Force in Bangladesh: An Empirical Analysis of Labour Participation and Employment

Abstract

This paper, the neoclassical model of labour supply has been used to investigate the labour force participation and the probability of being employed for the case of Bangladesh. To our knowledge, this represents one of the first detailed studies of labour force participation for Bangladesh and one of the few that exist for transition countries. The dataset was obtained from the Household Survey in Sylhet Division in Bangladesh during the period January to June 2004. The models have been estimated using Probit estimation method, separately for males and females. The findings suggest that remittances, as an important source of non-labour income, do not affect the labour force participation in any of the originally specified models. Among the most important are the education variables which are highly significant and positive with regard to probability of being active and employed. One of the main findings is that as the number of unemployed adult’s increases this decreases both the probability of being active and employed for males and females. Conclusively, the findings of this paper are largely in line with the theoretical framework and the literature with the exception of the remittances flow. Further research may be required to investigate the impact of remittances. Specifically, for Bangladesh, in such future research it may not be as important to investigate this from the viewpoint of hours of work as much as to have individual data with detailed income from both labour and non-labour sources.