Remittance and its Poverty Reducing Impacts in Nepal

Remittance inflows have become a cornerstone of Nepal’s economy, providing a vital source of external finance and supporting millions of livelihoods. According to the World Bank, Nepal received approximately USD 9.6 billion in remittances in 2023—an amount equivalent to slightly over 25 percent of its GDP, positioning the country among those with the highest remittance-to-GDP ratios globally. While literature widely associates these financial transfers with poverty reduction, consumption boosts, and modern human capital formation, estimating their precise causal impact is often complicated by selection bias, as migration is not randomly assigned.

To address these methodological limitations, this study utilizes Propensity Score Matching (PSM) to construct a credible counterfactual scenario. Analyzing the most recent, nationally representative data from the Nepal Living Standards Survey (NLSS 2022/23), the report estimates the Average Treatment Effect (ATE), Average Treatment Effect on the Treated (ATT), and Average Treatment Effect on the Untreated (ATU). Furthermore, by comparing these findings with earlier rounds (NLSS 2010/11), the study evaluates whether the poverty-reducing effects of remittances have become more inclusive over time or if structural inequalities—mediated by gender, education, geography, and caste—persistently skew migration outcomes. The insights generated aim to inform evidence-based policies that ensure remittances support long-term structural transformation and social inclusion.

The full research paper is available for download below.