# decades.

In the context of international migration from Nepal, I investigate the effect of three types of shocks using a panel of 452 villages across the country and observed in years 2001, 2008 and 2010. The first is the shock to farm income in the origin. Deviation of rainfall from its historic mean generates an exogenous variation in farm income both across the country for a given year and between different time periods for the same village. The second shock is a measure of conflict in origin which creates an income loss as well as utility loss, more so for the richer households. The ten-year long Maoist insurgency, which killed over 13,000 people, generates a variation in conflict intensity experienced by different parts of the country. In addition, the dramatic change in the trajectory of the insurgency gives rise to inter-temporal variation in conflict intensity experienced by a given village. In addition to the two ‘push’ shocks that affect the origin, I investigate the effect of an increase in the demand for low-skilled workers from abroad. I use the growth in the construction and manufacturing sectors in various destination countries to proxy for these ‘pull’ shocks from the destination countries. Here as well, different destinations countries that are plausibly in quite different macroeconomic cycles generates the variation that identifies my estimates. Differential effects of the global recession of 2008, further generates variation in growth rates across different destination countries.

Consistent with the theoretical framework, I find that rainfall shocks increases migration to India, but have no effect on migration to non-India destinations. Increase in farm income of US$ 100 due to rainfall increases migration to India by 2.5 percentage points (54 percent increase from its 2010 level) but has no effect on migration elsewhere. Rainfall shocks increases the income of the poor, who rely on agriculture, and enable them to finance low-cost migration to India. However, since rainfall shocks generate income gains that are small in magnitude relative to the costs of migration to other destinations, they do not enable too many households to migrate outside India. Similarly, an increase in conflict intensity by one death per 1000 population increases international migration from urban areas by 3.1 percentage points which is equivalent to the effect of increasing household income by US$ 420 in absence of conflict (after accounting for the average impact of conflict on urban consumption). Conflict reduces the consumption and amenity of the wealthier more, and therefore, induces a larger effect from richer (urban) areas. Lastly, I find that migration responds to increase in growth in the construction and manufacturing sectors in the destination countries, particularly Malaysia and the Persian Gulf countries. These findings suggest that increase in income can boost migration to India whereas a reduction in cost of migration might increase profitable migration outside India as well. Furthermore, the responsiveness to ‘pull’ shocks suggests that households are willing to take advantage of the profitable opportunities abroad.

This paper contributes to the literature on the effect of income at origin on migration. The canonical model of Harris and Todaro (1970) suggests than an increase in income in the origin reduces migration. Abramitzky, Boustan, and Eriksson (2013) finds evidence consistent with this using historic migration from Norway. Studies in many other contexts, which use shocks to weather as a source of exogenous variation in income, also find evidence consistent with this<sup>3</sup> . Examples of these studies include Munshi (2003) for migration from Mexico to the US, Marchiori, Maystadt, and Schumacher (2012) for migration from Sub-Saharan Africa, and Gray and Mueller (2012) for migration from rural Ethiopia. However, several other studies find the

> 3The practice of using weather shocks as a source of exogenous variation in income is quite common throughout the literature (see Jacoby and Skoufias, 1998; Kazianga and Udry, 2006; Miguel, 2005; Paxson, 1992; Wolpin, 1982, among many others, for instance).

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