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

40 Pages Posted: 19 Jun 2020

See all articles by Paras Kharel

Paras Kharel

South Asia Watch on Trade, Economics and Environment (SAWTEE)

Kshitiz Dahal

South Asia Watch on Trade, Economics and Environment (SAWTEE)

Jorge Dávalos

Universidad del Pacifico

Date Written: May 26, 2020

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.

Keywords: Remittances, Migration, Labour supply, Microenterprises, Entrepreneurship

JEL Classification: J22, F22, L20, O20

Suggested Citation

Kharel, Paras and Dahal, Kshitiz and Dávalos, Jorge, Remittances and Non-Farm Self-Employment Among the Left-Behind: Evidence from Nepal (May 26, 2020). Partnership for Economic Policy Working Paper No. 2020-06, Available at SSRN: https://ssrn.com/abstract=3631373 or http://dx.doi.org/10.2139/ssrn.3631373

Paras Kharel (Contact Author)

South Asia Watch on Trade, Economics and Environment (SAWTEE) ( email )

26 Mamata Galli
Kathmandu
Nepal

Kshitiz Dahal

South Asia Watch on Trade, Economics and Environment (SAWTEE) ( email )

26 Mamata Galli
Kathmandu
Nepal

Jorge Dávalos

Universidad del Pacifico ( email )

Av. Salaverry 2020
Región Metropolitana
Lima 18, Santiago Lima 11
Peru

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