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Using two rounds of nationally representative household survey data in this study, the authors measure the impact on poverty in Nepal of local and international migration for work. They apply an instrumental variable approach to deal with nonrandom selection of migrants and simulate various scenarios for the different levels of work-related migration, comparing observed and counterfactual household expenditure distribution. The results indicate that one-fifth of the poverty reduction in Nepal occurring between 1995 and 2004 can be attributed to increased levels of work-related migration and remittances sent home. The authors also show that while the increase in work migration abroad was the leading cause of this poverty reduction, internal migration also played an important role. The findings show that strategies for economic growth and poverty reduction in Nepal should consider aspects of the dynamics of domestic and international migration.
Using two rounds of nationally representative household survey data in this study, we measure the impact on poverty in Nepal of local and international migration for work. We apply an instrumental variables approach to deal with nonrandom selection of migrants and simulate various scenarios for the different levels of migration comparing observed and counterfactual household expenditure distribution. Our results indicate that one-fifth of the poverty reduction in Nepal occurring between 1995 and 2004 can be attributed to higher levels of work-related migration and remittances sent home. We also show that while the increase in international work-related migration was the leading cause of this poverty reduction, domestic migration also played an important role. Our findings demonstrate that strategies for economic growth and poverty reduction in Nepal should consider aspects of the dynamics of domestic and international migration.
As measured by its per-capita income, Nepal is one of the poorest countries in the world, with large parts of its population trapped in poverty within a stunning, but difficult to control natural environment. Under these conditions, since the wake of the 21st century, international labour migration and the associated remittances of large amounts of foreign exchange have rapidly gained influence on the country’s economic and social development, triggered by internal disturbances, in particular economic downturn and political upheavals, as well as external dynamics which boosted an uprising international demand for unskilled labour. While there is hardly any basic dissent about the short- to mid-term Positive growth effect for Nepal’s economy, surprisingly little is known about the consequences of this form of livelihood security at the individual household level, apart from some anecdotal evidence, although neither policy makers nor NGOs may effectively craft their strategies without considering this phenomenon. This book was developed from an Alumni Workshop held in Kathmandu in 2015, where, focusing on this knowledge gap, wide-ranging original research about the consequences of family members’ absence and the receipt of remittances was presented. Moving on from this starting point the authors further elaborated their work to make it accessible to a broader public, and exploitable as a resource for policy making and follow-up research. In addition, this volume includes detailed facts and figures about outmigration from and inflow of remittances to Nepal. With a view to long-term development implications of international migration it also considers the gain of knowledge and access to international academic networks brought into the country by returned scholars. The editor of the volume, Béatrice Knerr, is a professor of development economics, affiliated to the University of Kassel, Germany, where, until 2015, she was heading the Department of Development Economics, Migration and Agricultural Policy (DEMAP). Afterwards she has served as guest professor at the Universidad Autonoma de Yucatan (UADY) in Merida, Mexico, and at the College of Economics of Hue University, Vietnam. Presently she is on contract with the Brawijaya University of Malang, Indonesia, where she is joining research projects on rural development and teaching various modules in the Economics Faculty. As an expert in the implications of labour migration on the development of low- to middle-income countries she has published and edited around 30 books and 100 journal articles and book chapters.
Master's Thesis from the year 2015 in the subject Economics - Case Scenarios, grade: Very good, University of Glasgow (Adam Smith Business School), course: Master of Science in Economic Development, language: English, abstract: This research uses time-series data to examine the impact of international remittance flow on economic growth and poverty reduction in Nepal. It applies the econometric model suggested by Ravallion (2001), Ravallion and Chen (1997) and Adam and Page (2005) for remittance and poverty and Quayyum et al (2008) for remittance and growth. Both micro and macro level impacts were considered. The regression results show that remittance flow is positively and significantly correlated with economic growth and poverty reduction in Nepalese context. The finding suggests that in the short run international remittance flow had positive contribution in economic growth and poverty reduction through investments in health, education and consumption. Remittance also contributed to relax credit constraints, especially for the poor and in macro level, helped to finance trade deficit, accumulate foreign exchange reserves and to reduce government debt. However, a deeper analysis of the last two decades shows that increased remittance flow has been the major cause of decline of tradable sector through „Dutch Disease‟ effects. Moreover, remittance contributed to higher inflation, eroded work habits and brought adverse social costs. Combined, the long term impact of remittance seems to be overwhelmingly negative in Nepal.
Migration has historically been a source of opportunities for people to improve their lives and those of their families. Today, the large differences in income between places-particularly countries-continue to motivate individuals to escape poverty through migration. The potential advantages of migration for sending countries are numerous. Through remittances, migration provides a means of improving income and smoothing consumption; it enables households to overcome the lack of credit and cushion the risks involved in engaging in more productive activities; and migration can also act as a coping strategy in times of distress. Remittances can be spent on investments, such as housing and schooling, and directly on household consumption. Furthermore, new skills and education may be acquired at the place of destination and transferred back to the place of origin. This volume argues that although migration increases income and often reduces poverty, the migration opportunities of the poor are different-among the poor there are fewer migrants, and they travel to 'cheaper' destinations with lower returns. The main barriers to emigration encountered by the poor are lack of opportunities and high costs. This translates into lower returns and, very likely, less poverty reduction. As a result of this cyclical interconnection, the poverty-reducing potential that migration holds for developing countries is often not maximized.
Migration presents a stark policy dilemma. Research repeatedly confirms that migrants, their families back home, and the countries that welcome them experience large economic and social gains. Easing immigration restrictions is one of the most effective tools for ending poverty and sharing prosperity across the globe. Yet, we see widespread opposition in destination countries, where migrants are depicted as the primary cause of many of their economic problems, from high unemployment to declining social services. Moving for Prosperity: Global Migration and Labor Markets addresses this dilemma. In addition to providing comprehensive data and empirical analysis of migration patterns and their impact, the report argues for a series of policies that work with, rather than against, labor market forces. Policy makers should aim to ease short-run dislocations and adjustment costs so that the substantial long-term benefits are shared more evenly. Only then can we avoid draconian migration restrictions that will hurt everybody. Moving for Prosperity aims to inform and stimulate policy debate, facilitate further research, and identify prominent knowledge gaps. It demonstrates why existing income gaps, demographic differences, and rapidly declining transportation costs mean that global mobility will continue to be a key feature of our lives for generations to come. Its audience includes anyone interested in one of the most controversial policy debates of our time.
With reference to the poverty reduction strategy paper or the PRSP process initiated worldwide by the International Monetary Fund and the World Bank in 1999 as would be viable for Nepal.
Through the prism of a Nepali remittance village, this book critically examines poverty and livelihood dynamics remade through transnational labour migration and remittances, and their interrelationships with land, rural labour and agriculture. The concept of The Remittance Village emphasises rural people’s transnational mobilities as a key feature of contemporary dynamics in many parts of the Global South, which are reconfiguring rural social, economic and ecological textures. Sunam challenges complacent linear narratives that assume new opportunities such as transnational migration, and remittances provide better pathways for the rural poor to come out of poverty, as well as narratives that understate the importance of land and farming for the rural poor. He demonstrates both that new opportunities are inaccessible for many poor people and that accessing these opportunities often engenders increased precarity and vulnerability. In The Remittance Village, he finds that even those accessing new opportunities are successful only when their household member(s) are simultaneously engaged in in-situ (non-)agricultural activities. This book is a valuable resource for scholars and students from a range of interdisciplinary backgrounds, including human geography, anthropology of development, and sociology. It is also recommended reading for policy makers, international development agencies and I/NGOs working on rural development in the Global South. Chapter 3 of this book is freely available as a downloadable Open Access PDF at http://www.taylorfrancis.com under a Creative Commons Attribution-Non Commercial-No Derivatives (CC-BY-NC-ND) 4.0 license.