Do Remittance Reduce Poverty? The Role of Education, Inflation, And Unemployment. Time Series Evidence from Pakistan

Abstract

In many emerging economies, poverty is considered a major socio-economic issue, limiting access to crucial resources for a large share of population. In Pakistan, nearly 40% of the people’s lives under the national poverty line, confined in a cycle that’s hard to break without reinforcement. Reducing poverty requires not only increasing the per capita income, but effective policies that increase education, reduced inflation and unemployment. Therefore, the study examines the relationships between poverty, remittance, inflation, education and unemployment by utilizing the annual time series data from the period of 1995-2024. Using the Autoregressive Distributed Lag (ARDL) model, the. Several diagnostic tests like unit root test, normality test, multi-collinearity, heteroscedasticity, serial autocorrelation and specification bias are applied on the data to ensure its validity and reliability. The result shows that remittances significantly reduced poverty, while inflation and unemployment exacerbate it. Meanwhile education contributes to reducing poverty levels. The study offers valuable insights based on the results of the study for policy makers advocating the role of remittance poverty, education, inflation and unemployment to reduce poverty.