Journal of Global Economics

Impact of Remittance on Rural Household’s Welfare: Evidence from North Wollo Zone, Gubalafto Woreda in Amhara Regional State, Using IV-Estimation Technique

Abstract

Tesfaye Gedefaw Wolde

The ultimate objectives of this paper intended to estimate the impact of remittance income on household’s welfare using the household level cross sectional data. The study controls for various household characteristics, asset-holding variables, institutional, village level infrastructural variables as well as endogeniety problems using IV estimation. The results indicate that remittances positively and significantly affect household level consumption expenditure. Household characteristics particularly family size, participation on wage employment, distance to the main market and lowland agro ecological zone affect welfare status and access to extension service affects the welfare status positively and significantly. On the other hand, oxen, land size, non-livestock asset, participation on own business, access to credit and access to extension service have positive and significant effect on the household’s welfare status.