Work-Related Migration and Poverty Reduction in Nepal

Lokshin, Michael


This paper uses data from two nationally-representative household surveys in Nepal (1995 and 2004 NLSS) to examine the impact of internal and international migration on poverty in Nepal. To deal with selectivity issues, the authors use an instrumental variables approach and employ a maximum likelihood estimation that simulates various counterfactuals for different migration scenarios. Results suggest that almost 20 percent of the decline in poverty in Nepal between 1995 and 2004 can be attributed to increased internal and international migration. Without migration, the authors estimate that the poverty rate in Nepal would increase from 30 to 33.6 percent.