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The effect of emigration and remittances on labour supply of the left-behind: Evidence from Nepal

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  • Sharma, Hari

Abstract

Rapid increases in work-related emigration and subsequent inflows of remittances have raised policy concerns about impacts on labour supply in emigration-source countries. The growing literature in this area ignores spillover effects from emigration and remittances in one locality affecting outcomes in nearby localities. A two-wave panel of 500 localities in Nepal is used here, along with destination driven exogenous changes in predicted emigration rates, to identify impacts of emigration and remittances on labour supply. There is a positive impact on labour supply, but just for females. Also, emigration and remittances are associated with labour shifting out of agriculture as farm work is less preferred in remittance receiving households. While the spillover effect of emigration is as large as the direct effect, spillovers are limited to rural localities. Given the typical nature of rural labour markets, emigration-driven remittances help to overcome borrowing constraints and boost local activity that increases local wage rates and creates additional employment opportunities for the non-emigrants.

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  • Sharma, Hari, 2020. "The effect of emigration and remittances on labour supply of the left-behind: Evidence from Nepal," MPRA Paper 102091, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:102091
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    Cited by:

    1. Paras Kharel & Jorge Dávalos & Kshitiz Dahal, 2022. "International remittances and nonfarm entrepreneurship among the left‐behind: Evidence from Nepal," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 208-241, February.
    2. Fredrick Oteng Agyeman & Malcom Frimpong Dapaah & Agyemang Kwasi Sampene & Abdul Razak Monto & Emmanuel Adu Gyamfi Kedjanyi, 2023. "Economic Contagion and the Repercussion on Remittances: Evidence from Low and Middle-Income Economies," South Asian Survey, , vol. 30(1), pages 7-31, March.

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    More about this item

    Keywords

    labour supply; emigration; spillovers; remittances; Nepal;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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