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Remittance and its Effect on Poverty and Inequality: A Case of Nepal

Author

Listed:
  • Nimesh Salike

    (International Business School Suzhou, China)

  • Jingyi Wang

    (International Business School Suzhou, China)

  • Paulo Regis

    (Southampton Business School, UK)

Abstract

This paper examines the impact of remittance on poverty and income inequality in the context of Nepal using cross-sectional national survey-Nepal Living Standard Survey, third edition (NLSS3) of 2010-11. We employ a Heckman two-step estimation model with instrumental variables and constructed counterfactual income to investigate the real impact of remittances. We find that remittance has helped in the reduction of poverty ratio by 5.3% but deepened the poverty gap by 7.37% and severity by 9.25%. In terms of inequality, remittance has helped to reduce inequality within the remittance receiving group, however, it also contributed to rising income inequality when compared to non- remittance receiving group.

Suggested Citation

  • Nimesh Salike & Jingyi Wang & Paulo Regis, 2022. "Remittance and its Effect on Poverty and Inequality: A Case of Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 34(2), pages 1-29, October.
    • Handle: RePEc:nrb:journl:v:34:y:2022:i:2:p:1
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    remittance; poverty; inequality; Nepal; counterfactual;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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