Environmental Migration and Labor Markets in Nepal

Abstract

While an emerging literature cites weather shocks as migration determinants, scant evidence exists on how such migration affects the markets of receiving communities in developing countries. We address this knowledge gap by investigating the impact of weather-driven internal migration on labor markets in Nepal. An increase of 1 percentage point in net migration reduces wages in the formal sector by 5.7%. A similar change in migration augments unemployment by 1 percentage point. The unskilled bear greater consequences. Understanding entrepreneurial constraints and drivers of labor market exits will inform pathways to resilience.