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Remittances and Non-Farm Self-Employment among the Left-Behind: Evidence from Nepal

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  • Paras Kharel Author-Name: Kshitiz Dahal Author-Name: Jorge Davalos

Abstract

We estimated the impact of remittances from international migration on the labor supply of left-behind household members to non-farm self-employment and on the performance of the non-farm enterprises they operated. We used data from a nationally representative household survey from Nepal that included an enterprise module. We accounted for both the truncated nature of observed hours worked and the endogeneity of remittances when assessing the impact on labor supply, and, in estimating the effects on firm performance, we addressed selection into operating a non-farm enterprise as well as the endogeneity of remittances. Remittances were found to encourage women to reduce their labor supply in non-farm self-employment, whereas there was no significant effect on men. We found evidence that the disincentive effect was strong enough to exert a negative influence on the revenues of non-farm enterprises operated by the left-behind labor force.

Suggested Citation

  • Paras Kharel Author-Name: Kshitiz Dahal Author-Name: Jorge Davalos, 2020. "Remittances and Non-Farm Self-Employment among the Left-Behind: Evidence from Nepal," Working Papers PMMA 2020-06, PEP-PMMA.
    • Handle: RePEc:lvl:pmmacr:2020-06
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    Cited by:

    1. Usman Alhassan, 2023. "E-government and the impact of remittances on new business creation in developing countries," Economic Change and Restructuring, Springer, vol. 56(1), pages 181-214, February.
    2. Paras Kharel, 2019. "International migration and remittances in Nepal Revisiting some "facts", and role of economic diplomacy," Working Papers wp/19/01, South Asia Watch on Trade, Economics and Environment.

    More about this item

    Keywords

    Remittances; Migration; Labour supply; Microenterprises; Entrepreneurship;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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