Work-Related Migration and Poverty Reduction in Nepal

Using two rounds of nationally
representative household survey data in this study, the
authors measure the impact on poverty in Nepal of local and
international migration for work. They apply an instrumental
variable approach to deal with nonrandom selection of
migrants and simulate various scenarios for the different
levels of work-related migration, comparing observed and
counterfactual household expenditure distribution. The
results indicate that one-fifth of the poverty reduction in
Nepal occurring between 1995 and 2004 can be attributed to
increased levels of work-related migration and remittances
sent home. The authors also show that while the increase in
work migration abroad was the leading cause of this poverty
reduction, internal migration also played an important role.
The findings show that strategies for economic growth and
poverty reduction in Nepal should consider aspects of the
dynamics of domestic and international migration.