Linkage between labor migration, remittance and self employed business activities in Nepal

Abstract

This paper investigates the linkage between international labor migration, remittance and ownership
of self employed business activities in Nepal using a nationally representative cross sectional data. The
purpose of the paper is to test the hypothesis propounded by New Economics of Labor Economics. A
two stage instrumental variable Probit model is used to assess the relationship between the variables.
The findings suggest that household with migrant members is seven percent more likely to own an
enterprise while impact of remittance is negligible and insignificant. This paper concludes that the
skills and knowledge about technology acquired abroad by migrant labor could be instrumental for
expanding the self employed business activities in Nepal contributing to overreaching objectives of
poverty alleviation and creating jobs in the domestic market in the long run.

Keywords: International labor migration; Remittance; Self-employment; Business activities;
Entrepreneurship