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.