International Remittances, Rural-Urban Migration, and the Quest for Quality Education: The Case of Nepal

Using primary field data from recently developed urban areas of Nepal, we identify households who migrated from rural to urban areas and analyze the impact of international remittances on their investment in education. The results show that rural-urban migrant households who receive international remittances have lower income and consumption but higher human-capital investment, measured by the level and budget share of expenditure on children’s education and the time their children spend studying at home, in comparison to local households and other types of migrant households. The findings suggest that an important motivation for rural-urban migration is the search for higher-quality education, because the experience of international migration helps households to know the higher returns to education abroad and international remittances help to finance the costs of both internal migration and education. We also observe that the quality of education is an increasingly important concern in contemporary Nepalese society, possibly due to the anticipated higher returns to education in the global labor market.