Effects of Foreign Employment on Poverty, Labour Supply and Agricultural Growth in Nepal

The study analysed labour emigration from Nepal and estimated its effects on poverty reduction and agricultural growth. Using secondary data it compares agricultural output elasticities of foreign employment and assesses the role of foreign employment on the relationships between growth, poverty and agricultural development. The growth of the labour emigration follows a polynomial function of degree two with positive coefficients of second and first degrees. The major destinations of the Nepalese labour force are Malaysia, Qatar, Saudi Arabia and United Arab Emirates. Econometric models are employed at the sectoral level to establish the effects of migration on poverty and agricultural production. The results show that every million increase in the remittance inflow decreases the poverty head count by 0.007 percent, but every labourer emigrated reduces agricultural gross output by NRs 18,000. The results will be useful for devising sound policies on migration, poverty and agricultural development. The migration can be encouraged till it takes away the surplus labour from the economy and increases labour productivity without creating labour scarcity in the domestic production. Policy of increasing labour productivity at the domestic industries can increase the domestic wage rate that can ration the labour migration.