migrants are more likely to go to Malaysia when migrant demand in Malaysia is growing faster relative to the Gulf countries.

The results show that migrant supply does respond to changes in migrant demand (Table 9). In particular, the most recent growth rates have the strongest impact in migration outflows. The coefficient of 0.015 in column 1 corresponds to an increase in migration of 3.7 percent (evaluated at the mean) in response to an increase in growth rate of 5 percentage points. The corresponding increase for non-India destinations implied by the coefficient of 0.033 is 14 percent.

The results get stronger when India is removed from the list of destinations. As the last three columns of Table 9 shows, the magnitude without India as a destination is almost twice as when India is included<sup>19</sup> . This suggests that migrant supply is less responsive to increased construction and manufacturing in India. This could be because the same percentage growth rate translates to a much bigger increase in migrant income in non-India destinations than in India. Consequently, in the language of the framework, the share of households that is induced to migrate to non-India destinations is much higher relative to India.

Pre-existing migrant networks does not seem to be the primary channel by which potential migrants learn about the rising migrant demand in the destination countries. To investigate this, I interact the growth rate in destination with the size of migrant network from the village to the destination in the previous period. I find, particularly in cases where India is excluded as a potential destination, that the size of the pre-existing migrant network does not affect the level of response to growth in destination countries. The estimated regression coefficients are negative with p-values higher than 0.80 (results not shown). This suggests that potential migrants find information about migrant demand in Malaysia and the Persian Gulf countries from channels other than the existing local migrant network. The increased demand may be transmitted though recruitment companies and the local agents who seek workers more aggressively when migrant demand abroad is higher.

# **6 Conclusion**

Workers want to move towards better economic opportunities and away from disamenities such as conflict. The 2011 Gallup polls estimates that over 1 billion individuals desire to migrate abroad, at least for temporary work (Esipova, Ray, and Publiese, 2011). But the fact that only 3 percent of the global population are international migrants suggests that many who want to migrate do not, in fact, migrate. Lack of global mobility of workers has been suggested as one of the biggest distortions in the global economy (Clemens, 2011). Workers typically cannot migrate to places where the returns to their skills are highest for two key reasons. First, liquidity constraints may prevent them from being able to afford the costs of migration. And, second, the lack of demand for migrant workers, either economic or institutional, lowers the expected benefit from migration.

In this paper, I investigate how ‘push’ and ‘pull’ shocks affects the migration of Nepali workers to destinations that vary in their costs of, and returns to, migration. First, I find that income shocks, arising from positive rainfall shocks, increases migration to a low-cost lowreturn destination (India), but these shocks do not affect the migration to high-cost high-return

> 19These results are consistent with what I find in Shrestha (2017a) for migrant outflows from Nepal to Malaysia and the Persian Gulf countries. In an exercise in that study, I find that when relative exchange rates between destination changes, causing a shift in the wages that they earn, migrants respond by choosing the destination with a favorable exchange rate. I cannot use the same variation as a measure of a shock to destination wages in this study because Nepal has a fixed exchange rate with India.

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