Migration, remittance, and agricultural productivity: Evidence from the Nepal Living Standard Survey

Abstract

This paper analyzes the relationship between migration, remittances, and agricultural productivity using microdata from Nepal. Instead of focusing on total agricultural yield, a common approach in the existing literature, our innovation is to examine the impact of remittances on household-level agricultural productivity, measured by output per labor-hour. Methodologically, we follow a three stage least squares (3-SLS) method in order to overcome potential endogeneity concerns. Overall results demonstrate that remittance-receiving households exhibit a higher level of productivity. More interestingly, quantile regressions show a bigger effect in households with lower productivity compared to their counterparts, suggesting remittance as a driver of agricultural productivity in Nepal. Additionally, we show that the impact can be different depending on the ecological belt. Given these salient observations, we draw important policy implications to improve agricultural productivity in Nepal and other similar developing countries.