in remittances received by the country. In 2015, Nepal received over US$6 billion in remittances, which is about a third of the national GDP. Between 2005 and 2015, GDP per-capita grew by 3.2 percent per year, but GNI per-capita (with net remittance receipt included) grew by 4.8 percent annually. This shows how earnings abroad are more attractive to Nepali workers relative to the opportunities available domestically.

However, the process of finding a job abroad in Gulf-Malaysia is heavily intermediated and informal. Local agents typically connect potential migrants with recruitment companies in the cities, especially in the Kathmandu valley. In addition to connecting to another layer of intermediaries, these agents also help the potential migrants with the legwork associated with the migration processes and related paperwork. The recruitment companies, known as ‘manpower companies’, connect the workers with employers (or intermediaries) abroad. Typically, these agencies are responsible for obtaining an employment contract, a working visa, and make travel arrangements. Most jobs abroad require potential migrants to obtain a medical clearance and all individuals going abroad for work are required to obtain a labor permit from the Department of Foreign Employment, in Kathmandu. Both the local agents, and the manpower companies, are paid by the potential migrant before they migrate, often with money borrowed from family, friends, and local money-lenders.<sup>3</sup> Due to the nature of the recruitment market, the cost of migration to these destinations is quite high. Migrants to Malaysia typically pay $1,600 to migrate and expect to earn $440 per month for an employment contract of about 2.5 years. Migrants to the Gulf countries typically expect to pay $1,000 to migrate and can expect to earn $420 per month.<sup>4</sup> Under typical interest rates and reasonable earnings abroad, migrants are still able to consume and remit money to be used for their family.<sup>5</sup> For the migrants who can finance migration without a loan, typically those that are wealthier, or former migrants with some savings, greater share of migrant income, obviously, goes towards other non-repayment uses.

The extent of male out-migration in Nepal is high, not just in terms of the contribution to the economy, but also in terms of employment shares. In 2001, only 8 percent of the male working age population (10 percent of the male labor-force) were employed abroad. By 2011, the number more than doubled to 16 percent of the the working age population (22 percent of the male labor-force). Particularly for the relatively young males aged 15-44 from rural areas, the number of individuals working abroad is higher than then number of individuals employed in wage-work domestically, and only slightly smaller than the number of individuals employed by domestic agriculture.<sup>6</sup> The

> 3Please see The World Bank (2011) and Shrestha (2017b,a,c) for more details on the migration process in the context of Nepal.

> 4These data are collected as a part of the experiment studied in Shrestha (2017b). The earnings estimates are expectations of those who have prior migration experience, and are likely to be higher than actual earnings. These individuals actually earned $350-$400 per month in their past migration episode.

> 5For instance, with monthly earnings of $300 for two years, and a migration cost of $1,000 borrowed at a monthly interest rate of 3%, migrants would still make over $200 a month for non-repayment uses, more than twice the minimum wage in the formal sector in Nepal. Lodging and boarding, while abroad, are typically factored into the earnings, or are heavily subsidized, for most migrant workers in these destinations.

> 6Author’s estimates using Housing and Population Census of 2001 and 2011.

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