have only smaller proportion of households around them and therefore the net effect is likely to be very small and of ambiguous sign. See Appendix A for the details of how this figure is calibrated.

The third comparative static suggests that an increase in demand from abroad is likely to increase the number of households migrating to those destinations. This is also driven by increasing the desirability threshold: the households that chose not to migrate previously will migrate now, as the returns to migration are higher. Following Figure 2 again, the right cutoffs of migration to both destinations move further to the right, increasing migration in both places. For the same unit change in migrant income, the effect for India migration is likely to be larger than the effect for non-India migration. However, the same proportional change in migrant income, may induce larger response to non-India migration due to higher levels of migrant income.

# **3 Context and Data**

## **3.1 International migration from Nepal**

Historically, Nepal has seen reasonable rates of international migration, albeit mostly to India. Between 1961 and 2001, the migrant to population ratio hovered around 3.4 percent, and was almost entirely driven by migration to India (Table 1). This rate was slightly higher than the global international migration rate of 2.9 percent (UNDESA, 2015). The high rate can be attributed to the ethno-linguistic similarity between the two countries as well as the low cost of migration to India. Nepal maintains an open border with India, where citizens from one country are free to enter the other at any time without any restrictions, paperwork or clearances. This allows workers of either country to take advantage of the economic opportunities in the other. Historically, workers, mostly from Far-western and Mid-western regions of Nepal, have been migrating to India to work as daily wage laborers or security guards or in restaurants in Indian cities. Because of frequent migration to India over a long period, there are well-established migration linkages between districts in Nepal and Indian cities that help newer migrants find work in India (Seddon, Adhikari, and Gurung, 2002).

Because of the open border and historical linkages, India serves as the low cost and low return destination for Nepali migrants. A typical migrant worker to India pays Rs. 6,250 (USD 83) to migrate and find a job in India (Table 2). This amount is roughly over two months of per-capita consumption in Nepal. They earn, on average, Rs. 6,400 (USD 85) a month, of which they save almost two-thirds. The median migrant spends about 9 months in India per migration episode. This is consistent with the view that migration to India is seasonal and workers stay home during planting and harvest season and migrate at other times of the year. Almost a third of these migrants finance migration through their own savings while 60 percent take out a loan, mostly from village lenders and then from friends and relatives<sup>8</sup> .

On the contrary, migration outside India is a relatively recent phenomenon. Historically, people migrated to non-India destinations mostly through recruitment in the British Army. The numbers were small and directed to destinations like the UK, Hong-Kong, Singapore and Brunei. It was only in the late 1980s that Nepalis have started to migrate to other destinations for work. Foreign migration became easier after democracy was introduced in the country in 1990 and international travel was made easier and more systematic. Only in the mid-1990s, the

> 8Author’s calculations from Nepal Migration Survey 2009 and The World Bank (2011).

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