Labor productivity, remittance use, and the impact of the poverty alleviation fund program in Nepal

Nepal, Atul

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https://hdl.handle.net/2142/93050 Copy

Description

Title

Labor productivity, remittance use, and the impact of the poverty alleviation fund program in Nepal

Author(s)

Nepal, Atul

Issue Date

2016-07-12

Director of Research (if dissertation) or Advisor (if thesis)

• Kirwan, Barrett
• Nelson, Carl H.

Doctoral Committee Chair(s)

Kirwan, Barrett

Committee Member(s)

• Arends-Kuenning, Mary P.
• Buckley, Cynthia J

Department of Study

Agr & Consumer Economics

Discipline

Agricultural & Applied Econ

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Labor Productivity
• Shadow Wage
• Remittances
• Impact Assessment
• Poverty Alleviation Fund
• Nepal
• Minimum Distance
• Migration
• Gender differences in wages

Abstract

This dissertation presents three studies related to labor productivity, remittances use, and the effect of an anti-poverty program on migration and remittances. Labor is the biggest endowment available to the poor. Understanding labor issues is important in addressing the problems of poverty, inequality, migration, and economic development. In this dissertation, I estimate the labor productivity of agricultural household because most of the agricultural households in developing countries work in their own farms, it is not possible to observe wages. The first chapter estimates the shadow wage (marginal productivity of labor) of the agricultural household in the context of Nepal. How different is marginal productivity of labor for women compared to men in agricultural households? In developing countries, where most of the families work on their farms, wage or labor-related income cannot be observed directly. This paper contributes to the literature on gender wage difference in labor and development economics by developing a new approach to estimate the shadow wage of agricultural households in Nepal. Using a general functional form, we first derive the shadow wage from a theoretical model. Then, a model with ward-level fixed effects is used to estimate the shadow wage by gender for Nepalese agricultural households. We find that the productivity of women is not that different than that of men. Despite the vast difference in observed market wages for women, the distribution of shadow wages of women is not that different from that of men, calling for policies to increase the market wages for women. The second chapter of this dissertation, attempts to understand the use of remittances among the households of Nepal. Remittances are transfers made by migrant workers to their family and relatives in their country of origin. In Nepal, remittances account for 25-30 % of the GDP, and the trend of youths seeking work in other countries-- mostly in Southeast Asia and the Middle East-- has been increasing. Understanding the expenditure pattern of remittances-receiving households compared to non-recipients provides an understanding of the effect of remittances. In this chapter I employ nationally representative data from Nepal to investigate the effect of remittances on household expenditure patterns, and I compare the prevalence of poverty between remittance recipients and non-recipients. The findings that emerge are as follows: households receiving international and both domestic and international remittances have increased expenditure shares on education, suggesting investments in human capital in the household. In contrast I find a decrease in education expenditures for households receiving domestic remittances. Food expenditures share decreases for households receiving all types of remittances. Households receiving remittances increase the expenditure shares on durables and other consumption expenditures. Households receiving remittances have decreased shares in health expenditures. With regards to poverty, the paper shows that receiving remittances reduces the likelihood of being poor. In the third chapter of the dissertation, I evaluate the effects of the Poverty Alleviation Fund program (PAF) on remittances and migration using the data from a quasi-experiment. The PAF is a social fund program that has been providing services to marginalized communities in Nepal through various income-generating activities since 2006. Unlike previous research that has used conditional cash transfer programs (CCTs) to study the role of a development program on migration and remittances, I employ the data from the community-driven anti-poverty program that provides income-generating activities to participants. Using a panel dataset collected by Center for Economic Development and Administration (CEDA) of the Tribhuwan University and the PAF, and taking advantage of a quasi-randomized phase-in experimental design, I estimate the causal effects of a development program on remittances, migration, and welfare measures. I show that policy makers should be aware that community-driven development programs have unintended consequences for migration and remittances, which are distinct from the primary goals of the program: alleviating poverty and improving food security. The program results in a decrease of approximately Rs.6000 (approximately six percent of total household consumption) in remittances received, crowding out private transfers in the presence of public transfers. The paper shows an increase in domestic migration, but no change in international migration due to the program.

Graduation Semester

2016-08

Type of Resource

text

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http://hdl.handle.net/2142/93050

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Copyright 2016 Atul Nepal

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